HYIP and Cloud Mining Vs. Real Bitcoin / Altcoin mining
By: Oleg Belousov
Tags: Blockchain, Mining, Investment, Bitcoin Mining, Bitcoin

To those of you who are fortunate enough not to know what that is, it stands for ‘High Yield Investment Program’, a magic website/organisation which will provide you with an endless, life-long cashflow in exchange for only a small deposit of your capital.

The term could be used in conjunction, or as a synonym for ‘’Ponzi-scheme’’, an empty facade presented to the public as a brilliant financial plan to get rich easily.

Though mentioned extensively in literature (Mainly Dickens Martin Chuzzlewit and Little Dorrit, the first one to become famous for implementing this technique in real life is, surprisingly enough, Charles Ponzi.

Charles offered investors to participate in his master-plan of arbitrage of international reply coupons for postage stamps, which was evidently no more than a facade for using investors money to pay himself, as well as early investors.

As I am writing this story, the dim sound of my A4 ‘’Dominotor’’ miner accompanies me from my porch outside of my home office, so you can say I’m biased. Personally, I prefer the term ‘experienced’.

So, as you all may know, hundreds if not thousands of different HYIP ‘businesses’ pop-up every week, just like mushrooms after the rain. The poisonous kind.

There is one question which can save you lots of funds in life, and direct you to the few correct digital investments that are still out there.

If they have thought of a brilliant way to make money, what do they need you for?

The answer then will become evident.

Unfortunately, not everybody is blessed with critical thinking, and some people still take the bait, enough to feed this growing industry of glorified theft.

Another unfortunate truth about this ‘business’ is that they typically use cryptocurrency funding to anonymously receive funds from their victims and thus affect the reputation of cryptocurrencies unfavourably.

Each one of those questionable ventures, has more or less the same properties:

A website promising huge daily returns for life, without you ever having to do anything except depositing some money. A somewhat reliable cover story AKA business-strategy.

For example, recycling for recyclix or industrial electricity trading for the retired ‘coince’. A Great Britain registered Limited company (LTD), that can be obtained easily by a variety of service providers for as low as £20.

It’s worth to mention that no identification is required for most incorporations, and that a legal office location and a nominee local director will cost couple of dozen more pounds, but that’s it.

Typically the incorporation certificate will be proudly hanging on the front page of the website. A ‘verified’ EV (extended validation) ‘green-block’ SSL certificate, similar to the one you will find on the websites of banks and other financial institutions. It will always close down the moment it will stop growing. This period can vary anywhere from several days, through several months, to several years.

Aside from the several other red lights that already lit up during the past few paragraphs, there is essentially one main problem with the HYIP model.

It is a debate similar to the one raised numerous time along the history by philosophers of various streams, as a tool of empirically determining the morality of one matter or another.

What would happen to our society if everyone ran HYIP that don’t generate any real world value?

What would happen in case everyone would successfully make a living of of on of those facades?

Whilst not all online MLM, Pyramid and cloud-mining offers are scams,

they all share the same basic issues.

No control or physical evidence over the purchased product is usually provided.

Given an asset that provides a daily profit of X, no sane business person will sell it for less than X (e.g. your profit), much less one in charge of a big firm/corporation (as most of those venture present themselves).

What are the alternatives?

Buy risk, or more specifically your own ASIC(Algorithm Specific Integrated Chip).

As we established well enough at this point, there is no money on the floor, and the only way to make money is venture to take the risk of loss, for the chance of possible profits.

Purchase your own miner, have control over your own hardware, control where you send your hashing power and which coin you mine.

Yes, some will say it is a waste of electricity, but in fact, it is the very activity that secures the blockchain of any coin, and the very essence of allowing transactions to take place, and thus, it is value-creating.

Below is the profitability chard of my A4 terminator (1 unit out of 2) that costed me $1250 including shipping and taxes back in December, and was making since then 1–0.5 LTC.

Let’s take the lower end of this chart, $5 daily profit after electricity, that’s an ROI after 250 days, or, if you like 146% per year.

The risks

Of course, cryptocurrency price may vary, difficulty can grow, but this the risk you must venture to take, and frankly, it is probably your best shot at this industry.

Lately, Bitamin introduced a new chip called L3+, which is not currently in stock for purchase.

However, it is my suspicion that some of those units started conduction PoW (proof of work mining), since both mining difficulty and network hash rate rose over 20% between April 19 through April 21.

With that being said, the current ASICs are already at the 14nm silicon technology, and a further leap to 10nm chips(accompanied by another major difficulty increase) would probably take several years.

So now is a good time to enter this world, like any other.

Litecoin difficulty and hash-rate monthly chart

More importantly, this happens at your home (or office / warehouse) network, at your full and exclusive control, and does good for the cryptocurrency community and the sustainability of the network.

On a side note, the larger part of my personal profit from crypto-currency lies in simply holding it, rather than mining and selling it.

If you are looking for a possible investment perspective without the hassle and the noise, it might make more sense to buy some cryptocurrency and hold on to it (buy-and-hold).

I will conclude with yet another quote

Wall street makes it’s money on activity, you make your money on inactivity

Who else, if not Warren Buffet

On the next article in the series, I will cover the difference between various hashing algorithms, their corresponding types of hardware and various techniques to make your mining more profitable (multi-mining, merge mining).

Our company, Nexchange offers cryptocurrency exchange services, as well as rea miners, shipped to you from mainland Europen immediately once payment is cleared and without the hassle of dealing with customs.

It is also possible to acquire a hosting contract for your physical miner (with full access & control including SSH and control panel) and leverage our discounted electricity rate and team of experts.