PTT Post Seeking Help "Family Bought a Virtual Mining Rig": Investing 100,000 in Mining, Is a Daily Return of 500 a Scam?

A post asking netizens lets us revisit messages related to cryptocurrency scams. (Previous context: Scammers are targeting the Mt. Gox theft case with 8.6 billion USD worth of Bitcoin wallets, beware of OP_RETURN phishing scams.) (Background supplement: Is Big Brother Mai Chi the spokesperson for the Taiwan Mobile exchange TWEX? Scam ads laugh off the crypto world.) First, let’s respond to this big question in the title: are “Cloud Mining” and “Virtual Mining Rigs” scams in the virtual currency world? Without detailed information to make a judgment, the general assumption is that they are scams, no doubt about it. Today, an article appeared on PTT’s gossip board, the author has no investment or contact experience with cryptocurrency, only knowing that a family member invested over 100,000 New Taiwan Dollars in so-called “virtual mining rigs” with suspicious investments, earning about 500 New Taiwan Dollars in mining income daily, not a physical mining rig, but a “cartoon icon” running in the cloud. He wants to ask netizens whether his family member has encountered a scam? The original poster indicates that the project also invites investors to offline gatherings, treats them to hotel buffets, and even invites them to travel to China. Upon reading this, the majority of seasoned crypto investors’ minds have already flashed a red light. We all know a few friends who have been mining Ethereum for several years, and we haven’t heard of such a wealthy Ethereum foundation treating old miners to any hotel buffets. To seriously respond to the case in the PTT article: investing over 100,000 in a virtual mining rig and receiving 500 New Taiwan Dollars daily means an annualized return of over 100%. If the investment return exceeds 10%, one should raise vigilance; if it exceeds 100%, it is no longer an investment and is highly likely to be a scam! To explain scams, let’s not discuss the high-level blockchain technology, but talk about those lurking in the corners of the internet, branding themselves as “Cloud Mining”, “Passive Income”, “High Returns with Low Risk”, and “Offline Team Support”, which may lead your investment to a total loss. “Cloud Mining”: Is your computing power real? People may often see ads for “Cloud Mining” or “Cloud Computing Power” online, which sound wonderful, right? No need to buy expensive mining rigs, no need to worry about electricity costs and noise, just “buy mining rigs” online and rent computing power, you can earn money while lying down. The problem arises: how do you know the computing power you rented actually exists, or if it’s just a string of fictional numbers? This is the core of many scams; fraud groups set up beautiful websites (or even not that beautiful), showcase seemingly professional data (which you cannot understand), and tell you they have large physical mining farms overseas, claiming the mining rig you bought is a one-to-one subscription of their physical mining rig’s computing power. Fraud groups even forge investment apps to make you see the numbers in your accounts steadily increasing every day, making you believe it without a doubt. Small amounts of tokens (possibly USDT) are credited to your wallet daily, but they are either to tempt you into making larger investments or will suddenly show failure when you want to withdraw large amounts! You must invest more “taxes”, “unlock fees”, etc., and in the end, the victim still cannot withdraw. Below, we provide a few real scam examples; in addition to these examples, thousands of fraud cases related to virtual currency happen globally every day. Real Case 1: The Disappearing Mining Farm. Singapore once cracked a cross-border fraud case where the main suspect claimed to cooperate with a large mining farm in Yunnan, China, owning 300,000 mining rigs, attracting over 700 people to invest with a promise of “0.5% stable daily profit”, raising a total of 160 million New Taiwan Dollars. What was the result? There was no such mining farm at all; everything was paid for with new investors’ money to cover the “profits” of old investors, which is a typical “Ponzi Scheme”. Real Case 2: The High-Return Bait. Another common tactic is to promise unrealistic high returns. Some platforms even claim to have 100% profit per month, which is a fairy tale in any legal investment market. In 2018, the U.S. Securities and Exchange Commission (SEC) shut down a cloud mining scam called Bit-Club Network, which defrauded investors of over 720 million USD. These scams often make various excuses when you want to withdraw your money, ultimately shutting down the website and disappearing. “Virtual Mining Rigs” Trap. In addition to cloud mining, there is also a method where you are directly asked to “invest” or “purchase” virtual mining rigs. Real Case 3: Ghosts in the LINE Group. In Taiwan, a fraud group established a “Cloud Coin (YNC) Mining Farm Group” on LINE, deceiving a person into investing 2.44 million New Taiwan Dollars to buy “Mining Coins”. Their method usually operates on social media, led by so-called “teachers” or “analysts”; other members in the group are actually stooges, creating an illusion of profit daily to brainwash the victims. This kind of “raise and kill” script usually lets you taste a little sweetness in the early stages, aiming to entice the victim to invest more funds. How to distinguish real from fake? After seeing so many scams, here are a few ways to help you sniff out risks from subtle changes. When facing these mining investments, pay attention to these points: Is the promised return rate “too good to be true”? Any guarantee of profit, sure-win and absurdly high returns basically have problems. Is the investment ownership clear? Can you verify the ownership of the mining rig or computing power you bought? Can you connect the computing power to a reputable mainstream mining pool like F2Pool for verification? This is a key indicator. If the other party can only provide screenshots or blurry videos, you should be highly suspicious. If there are no photos, just forget it. What coin are you mining? Confirm whether you are mining mainstream currencies like Bitcoin or Ether that have market circulation, or some unheard of, non-redeemable “scamcoins”. Is the token’s community operated by real people? Is the cash flow transparent? Legal platforms will have clear contract terms and cash flow mechanisms. If the other party asks you to transfer money to suspicious personal accounts or communicate and transfer funds through informal channels like LINE, that is definitely very dangerous. Investments related to cryptocurrency do bring opportunities, but they also hide many scam traps. Reiterating a point, if you cannot understand why you are making profits, then you are the source of someone else’s profits. Related reports: Former Binance executives and Telegram Mini App Blum co-founder arrested for “large-scale fraud”. NIKE shuts down RTFKT and is sued! A class action lawsuit alleges NFTs are unregistered securities, involving fraud claims of over 5 million USD. On-chain detective ZachXBT reveals the “50x leverage whale’s true identity”: a habitual scammer, arrested last year for theft in two casinos. 〈PTT posted asking for help: “Family bought virtual mining rigs”: Investing 100,000, receiving 500 daily, is it a scam?〉 This article was first published on BlockTempo, the most influential blockchain news media.