Key Takeaways
- The cloud mining sector has suffered from a string of scams and Ponzi schemes.
- New platforms are reimagining cloud mining.
- For instance, GoMining lets users buy tokenized virtual miners represented by NFTs.
Plagued by scams and Ponzi schemes, with only a few trustworthy providers to choose from, cloud Bitcoin mining has grown stale.
However, new platforms that reimagine the concept are bringing it back to life.
What is Cloud Bitcoin Mining?
For individuals who want to mine Bitcoin, cloud mining presents a more accessible alternative to traditional pool mining, which requires physical hardware and consistent maintenance.
Models vary, but the basic idea is to fractionalize the ownership of industrial mining outfits.
Rather than running their own equipment, individuals buy or rent shares in the hash power of large mining operations, which distribute block rewards to shareholders.
The concept was pioneered in the mid-2010s by platforms like Hashflare and Genesis Mining. But the sector has been plagued by controversy.
Investors Hit by Scams and Ponzis
In 2015, HashOcean raised millions of dollars worth of BTC from investors, who believed they were buying access to a global mining powerhouse with locations in six countries.
However, the whole thing turned out to be a Ponzi scheme. Supposed BTC rewards were actually paid out of new deposits. When this was no longer sustainable, the company vanished overnight, leaving investors high and dry.
In the following years, scams like BitClub Network and Mining City followed the HashOcean playbook, raising money for platforms that never materialized.
New Approaches to Virtual Mining
Today, some of the most reputable cloud mining platforms include the OG Genesis Mining and BitDeer, an infrastructure powerhouse that spun off from Bitmain in 2021.
But a new generation of platforms are applying a twist to the concept.
For instance, GoMining lets users buy tokenized virtual miners represented by NFTs. Each virtual miner corresponds to a share of the hash rate in GoMining’s facilities and can be upgraded to have more hash power or efficiency.
Speaking to CCN’s Eddie Mitchell, CEO Mark Zalan rejected the cloud mining label.
Alluding to past scams, he acknowledged that “a lot of people did a lot of bad things” in the space. But he sought to distance GoMining from the established model.
“We wanted to build a digital product and give people access to a digital miner, but you still want to feel something tangible,” he stressed.
GoMining isn’t alone in using tokenization to reimagine cloud mining. Other platforms like Minto are also exploring novel models that have more in common with DeFi than old-school cloud contracts.
This new paradigm emphasizes transparency, composability, and fun, breathing new life into an old concept.
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James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
