Why do people say Genesis Mining is a scam?

in #bitcoin7 years ago

Crypto' Mining

This has been bothering me for some time. I want to buy a Genesis Mining contract, probably for Ethereum. But I keep seeing posts all over the place claiming it's a bad deal or even a scam. Why is that?

Math looks good to me!

When I do the math, it seems pretty legit.

At home right now, I have 24 Nvidia GTX1060 GPUs, currently mining Ethereum (ETH).

IMG_3238.JPG

Without boring you with all the details, this set-up cost us around NZD$15,400. It costs around NZ$440 a month to run and mines at a total of around 500MH/s.

Screen Shot 2017-09-25 at 12.25.55 PM.png

Looking at Genesis Mining's site, I see that a similar hash rate over a two year contract will cost me US$14,000.

Screen Shot 2017-09-25 at 4.51.53 PM.png

At an exchange rate of NZD$1.00 = USD$0.73, that's NZD$19,178.

Our electrical bill over 24 months, running the rig 24/7 will be approximately NZD$10,460. Adding that to mining rig set-up costs of $15,400, we arrive at NZD$25,960.

That's NZD$6,782 more expensive than Genesis Mining!

... over two years.

Have I done the math' correctly?

Difficulty Level

Screen Shot 2017-09-25 at 5.05.41 PM.png

I am aware that the difficulty level for mining Ether... well anything really, is always increasing — at least so long as the commodity still has any value. I am also aware (afraid?) that mined coin will likely cost more in electricity in way less than 24 months than I could just buy them for — give or take wherever a stone toss in the dark may land.

Or that could be the case for a while and then not again. No one can really know how it's going to go, long term.

At the same time, Ethereum is making changes towards being proof of stake rather the proof of work. That might result in a sudden dump of hashing power onto all the other coins, essentially messing mining up for everyone. But that's not happening anytime very soon.

Hardware liquidation versus none?

OK, so two years from now, I have a bunch of yesteryear's GPU graphics cards I could maybe recover some 20% of initial cost on, assuming the market isn't flooded by a bunch of other miners doing the same and if none of them have cooked by then. Not much chance of that working out, I should think.

Or maybe those cards will already be useless in just six more months, so I have a chance to regain a portion of initial investment, whereas this is not possible with a cloud mining contract. But would I, actually? Or would I keep the equipment in hopes the market will change down the track and become profitable before. That's exactly what has happened recently -- the reason I have mining equipment now at all.

So, long as Genesis lets me assign my hashimotos to some other coin -- and it seems they would, then I least have the same chance of remaining profitable as with my own rig AND I save a bunch on the initial set-up ... not to mention all the worry of trying to keep these things cool as the New Zealand summer approaches.

Am I missing something?

I suppose if mining does become non-profitable, for any coin with either mining scenario, then we're pretty much screwed. That doesn't seem to stop others from doing though. Am I wrong? Am I a sheep following the flock over the waterfall?

That's a scary thought, come to think of it. I already came within an inch of drowning (literally) before. Not a fun experience.

What are your thoughts?

Be blunt! Tell it how you see it.

Thanks for you input!

Bryan.

Sort:  

I have a 8x 1080Ti rig and I'm also using genesis, I should be able to answer your questions:

  1. Genesis is not a scam, but we are all getting tired about the fact payouts are not regular... I'm still waiting a transfer of ETC since 19th of Sept, and I got one for the 22nd... the service is lacking a lot...
  2. The return is actually a bit lower than mining yourself, but I'm ok with it as I do not have to check the mining every 3x2
  3. In June the company got hacked... when you sign up with them they tell you that if something happen they will not refund your money, so you hold 100% of the risk

At today, to be 100% honest, I'm putting my new investments into Bitconnect, even if there are more people saying it is a scam, so far they have NEVER missed a payout and you get your full ROI in 3 months, while with a Rig you have 10-11months and with Genesis 12-14 months.

Hope it helps!

Thanks @cryptomarketer! That's definitely useful insight.

Bitconnect ... hope it works out long term for you.

I would be a lot more interested if the claimed, "trading bot" has any evidence at all behind it. I can find none what-so-ever that it even exists. :-/ Have you?

To be fair, I'm once bitten, twice shy on this one ...

I was involved in a similar program some years ago, back when eGold was a thing, not long after PayPal launched, iirc. Same sort of claims, "automated trading algorithm". I lost about $1,000, being one of the last to join up. Everything was going great for about two months. But it turned out, just as some are predicting for Bitconnect, that all the, "trading profit" was actually just from the growth of new members investing. So long as more members invested more this month (or reinvested) than the previous, then, "profits" could be paid out. However, the instant that slowed down, everything stopped and the owner disappeared with all the cash. That program lasted less than six months in total, having been advertised heavily all of the show.

Please be careful. Withdraw most your profits as they come around and don't reinvest more than 10%, would be my advice. ;-) Of course, I hope to be wrong on this one. But in any case, I'm simply too long in the tooth to risk it, now.

Cheers!

I agree 100% with what you are saying, I do not think bitconnect will exist in 2-3 years.... Regarding the bot, to be honest, I think it can exist even without proof.

They do not always send return, and the system works quite simple to me.... when the market goes up you get returns, when the market goes down you normally get basically nothing (0.00%-0.05%).

Anyway my portfolio is currently divided in Buy-and-Hold for a solid 70% of my portfolio, Mining for a 20% and Bitconnect/trading for a 10%... As mining to be honest is giving so many troubles or missing opportunities I'm decreasing that part to increase the Bitconnect one. Maybe in 6 months from now I will just move to more buy-and-hold. As you know this market goes so fast that every month we are in a different scenario :)

Sounds good to me. Yes, every month a different scenario indeed!

Every month more study and complex shots in the dark, trying to decide the best choice going forward. By the time I figure it out sometimes, I'm already too late! LOL

Peace.

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