Bitcoin developer Gavin Andresen suspects most cloud mining operations are Ponzi schemes

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Gavin Andresen, the chief scientist at the Bitcoin Foundation and one of the most respected and well-known crypto-developers, recently made a very interesting statement about Bitcoin cloud mining, accusing most of these operations of being Ponzi schemes.

The statement, published on Reddit, almost went unnoticed, according to CryptoCoinsNews. Everything started when Redditor zapt0 asked the Bitcoin community their opinion about mining contracts. While most of the responses were  negative, Gavin’s reply was the most unexpected.

They make no sense. I suspect many of them [the Bitcoin cloud mining companies]will turn out to be Ponzi schemes.

Most people replying to the same question apparently share Gavin’s point of view or at least have a negative opinion regarding cloud mining contracts.

Mining contracts for the most part are a ripoff designed for the uninformed. Sad but true.

If it was more profitable to mine the people would not sell contracts, they would simply mine themselves. BTC mining contracts are a waste of time… Better to just buy BTC.

The fact is that several different types of fraud have happened before in the Bitcoin ecosystem. From investment scams to non-existent mining hardware manufacturers, a lot has already happened, so a Ponzi scheme would not be a complete surprise.

Of course, some Redditors still believe it is possible to make a profit with could mining contracts. “If you use the ones [contracts]on Cryptsy (MN1/MN2) or on CEX.IO, you can make money on those if you speculate on them. But as a long term investment, it is hard to even break even as you say. Even with the recent dip in hash rate increase”, the user kilorat wrote on Reddit.

CEX.IO is one of the most famous cloud mining companies, but not always for the best reasons. Although this was the trading platform that brought cloud mining to the masses, they also control the GHash.IO mining pool. The pool was recently involved in controversy for the second time in a year and for the same reasons: the possibility of a theoretical ’51% attack’ against the Bitcoin network.

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Maria Santos

Maria is an experienced journalist currently living in the UK. She has been writing about Bitcoin and the altcoin universe since 2013. She is also a member of the Lifeboat Foundation's New Money Systems Board and a big cryptocurrency supporter.

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