The days have long gone when anyone could conveniently mine Bitcoin. This is because it is far more difficult, complex and competitive to mine these days unlike in the early days when PCs could mine bitcoins. So is bitcoin mining a scam?
If you are a Bitcoin enthusiasts or someone who likes to hang around anything crypto, you’ll find out that there are thousands of sites claiming they can give you high ROI by allowing you invest in their bitcoin mining projects.
The truth is that none of those sites is actually involves in bitcoin mining or that of any digital currencies for that matter. What those sites do is scam people.
Mining Difficulty of Bitcoin
Bitcoin was designed to be increasingly difficult to mine over time and now requires expensive and specialized hardware. Consequent upon this, it is now exclusively mined by large mining farms and pools. So any sites telling you that they are mining bitcoin or asking you to invest some money to help you mine are mostly ponzi schemes and scammers.
Ponzi Schemes and Scammers Posing as Bitcoin Miners
As you may know, ponzi and pyramid schemes are scams in which older members are paid by new members and all encouraged to recruit new people just to get funds to pay the owner and promoters of the scam.
This is exactly what these so-called bitcoin mining sites do – get people to invest by promising outrageous and unrealistic returns and promise them more money for referring others.
Bitcoin Miners Don’t Hunt for Referrals and Affiliates
In reality, most bitcoin mining business has no interest in referrals since it is a fund generating and nearly self-sustaining industry.
Basically, what is required to mine bitcoins are mining hardware, a cooling system and an energy source for the electricity that powers the hardware. These mining farms are usually large businesses that have little or no interest in having retail investors to pay outrageous sums.
The reason is that Bitcoin mining is not as simple as people make it out to be. Neither do you just mine with any hardware you lay your hands on. The cheapest mining hardware for Bitcoin costs thousands of dollars and even having one is not enough to make mining profitable.
Pools Make Mining Profitable
What bitcoin miners do is that they join larger mining pools forming a synergy of hashpower to give them greater chances of success. This is so because bitcoin mining is very competitive. Successful mining is dependent on node that first solves a mathematical puzzle.
Miners understand that when many computers (nodes) are linked together in a pool they stand greater chances of mining bitcoin. The actual mining involves confirmation of transactions on the Bitcoin network and adding such blocks to the chain based on consensus with all the nodes on the network.
In simple terms, the miners confirm that the transaction on the bitcoin network is authentic foreclosing the possibility of the owner of the coin spending it twice (double-spend). They are rewarded with the mined blocks which is the incentive for mining. They also benefit from the transaction fees on funds sent on the Bitcoin network.
Current Bitcoin Price Below Breakeven Point for Mining
Bitcoin is presently trading at $3,697 and this is really bad times for miners because this price is below the breakeven value for many Bitcoin miners according to analysts. Now under normal circumstances, miners have no reason to ask you to invest so that they pay you interest. It is a business not a humanitarian service.
With lowered income, they would not be interested in your investment, not now that mining business is experiencing hard times. This is why you should be skeptical of any sites telling you that you can earn bitcoin by investing some funds with them.
Most Bitcoin Mining Investments are Scams
These are scams that have been designed to pay just the owners and their accomplices. At best, they may pay a few early investors that put in small sums to use them as baits to lure in big investments. This is the point at which the scammers disappear with people’s money.
Some Cloudmining Sites May Be Genuine
Nevetheless, there are few genuine cloudmining sites that are actually involved in mining operations although I think they mostly mine cheaper and easier coins than bitcoin.
Any claim of large payments by any sites is indicative that you are dealing with a scam. Mining is not as simple as scammers make it out to be. Miners are literally minting money out of thin air and do not have need for you investment for payment.
The smaller ones that need your funding cannot afford to pay as much as scam site would make you believe. So basically, the big miners have no time to ask for your funding while those that are small do not make as much profit to pay you 100 percent in a few days.
The cloudmining services would ask you to pay for hashpower but the rewards are more realistic and your payments may come in weeks or months and are not as high as 50 or 100 percent as seen with high yield investment scams.
Ignorance Fuels Bitcoin Mining Scams
The targets of scammers are people that know little about Bitcoin and cryptocurrencies generally. This is why the first step you have to take in earning bitcoin is education. Learn about Bitcoin then acquire some bitcoins.
This will enable you know what digital currency is all about. Then there are many ways to earn bitcoins. Scams will only steal your coins but you may not recognize them as scams if you are not well-informed.
Bitcoin is Money
Nevertheless, before you can earn bitcoin or any other cryptocurrency successfully you have to understand that Bitcoin is money and they do not pick money off the floor like pick berries off the shelf of supermarkets.
Avoid ponzi schemes, pyramid schemes and all the high yield investment programs promising you overnight wealth. The only person that’ll get wealthy if you hang around such sites is the scammer.
Bitcoin has very high potentials and the price is quite low now. If you have the funds and you’re considering investing in Bitcoin, the right time to do so is now. Bitcoin at $3,697 is basically at its cheapest or close to its bottom price for 2019 all things being equal.
There Must Be A Price Spike in 2019
The next bull-run will see price spike and the coin market is expecting it. If you ask me, I’d tell you this is the right time to buy. Paxful and Localbitcoins make it easy to own your own bitcoin. You must not necessarily buy 1 BTC since fractions are available.
You can join the hodlers (people who believe that bitcoin will become very valuable in future). In December 2017 its value was $20,000. I think we’ll see high values by December 2019.