In the cryptocurrency world, mining is attributed to a measure whereby individuals volunteer their computing resources like mobile devices, processors, and memory to calculate and solve complex mathematical equations. And those equations are used further to validate and verify a transaction in blockchain technology. In return for volunteering the resources, miners receive rewards in Bitcoin Cash, Ethereum, Litecoin, etc.,
The problem occurs when some devious applications and developers fail to live up to their end of the bargain. So, in some cases, applications through which mining is being done fail to deliver what they promise. This leads to mining scams. No industry is immune to scams, including cryptocurrency.
What Are Mining Scams?
Mining Scams are a series of illicit activities often conducted to steal money from traders, investors, and individuals. In recent years, mining scams have generated a lot of controversies. A report by Cyber-Forensics.net mentions: “Historically, mining scams have produced enormous profits for the developers making individuals believe they too, can ace the game.” And although people can indeed make money from mining, too many people have lost their hard-earned lifetime savings to ill-advised schemes.
Newspapers are filled with outrageous examples of mining scams running wild on the internet. From forex trade scams reaching new record-breaking heights to digital wallets becoming fertile ground for new variants of crypto scams, investors are forced to seek help from fund recovery companies. In most cases, scammers employ hard to detect techniques like phishing attacks, social engineering tactics, and interactive conversations to trick entrepreneurs. Once the target is convinced, the scammers disappear with the stolen cryptocurrency.
Types of Mining Scams:
Crypto fraudsters can employ various techniques to target their victims. Essentially, they can involve:
- Financial crimes
- Pump and Dump schemes
- Market manipulation
- Brokers. Dealers Fraud
- Ponzi schemes
- Social media networking sites
- Unscrupulous promotional websites
How Do Mining Scams Work?
Like tactics employed in other industries, scammers rely on misguiding crypto users and brainstorming them to sound appealing. Chief analyst Timothy Benson explains the volatile nature of cryptocurrency and that it is still a technology that hasn’t reached the maximum number of investors. It becomes easy for scammers to target their victims.
Scammers will often work their way from any angle to reach their potential targets. They may create fake profiles on Instagram, Twitter, Facebook, look-alike websites to launch their fraud schemes. They also create believable scenarios under the false pretext to sound legit.
A recent survey by Lookout Inc. recently uncovered a significant crypto mining scam being run using hundreds of Android apps. The fake apps were designed to target people interested in cryptocurrencies. When the researchers at the lab probed them further, they discovered a complete application that was estimated to have stolen millions of dollars from approximately 93,000 victims. Further investigations resulted in removing all the apps from Google Play and apps on Play.
However, not every scam is easily detectable. Some scam tactics can be complex to detect for even the most experienced investors unless the user is aware of online target hunting techniques employed by scammers.
Once the scammers acquire a decent amount of following, they send announcements regarding the recent purchases and link them to genuine sites. The final piece of tricking includes more press releases to fill investors with excitement. Then the tools are exploited to promote the mining scams further.
How to Avoid Mining Scams?
Scammers always find new ways to steal money from crypto holders. Account recovery specialist Peter Thompson says, “one sure sign to identify a mining scam is when someone requests a specific mode such as wire transfer, gift cards to pay the amount could be a scammer. However, there are other telltale signs which shout scams, and investors can take a note of these to avoid mining scams:
- When someone claims that mining can only be done using any specific method. While it may be true in some mining cases, it does not apply to all. Methods like proprietary don’t usually yield many profits. Therefore, it is easy to identify these sketchy bitcoin agents.
- Some companies promise significant earnings in a short time and achieve financial freedom.
- Scammers usually start sending unsolicited emails, texts, messages through networking sites or dating websites.
- The scammers use sugar-coated phrases to trick investors into believing they can make money quickly.
- Some scammers may even send fake employment offers in the disguise of helping recruit cryptocurrency investors, converting their financial assets to bitcoin.
How to Report Mining Scams?
When someone has been a victim of a mining scam, they can reach out to the following authorities:
- Local Authorities: Start by reporting the matter to state consumer protection offices. If victims have lost money in possession, they should contact local police as well.
- Federal Government: Any financial fraud can be reported to federal agencies like Federal Trade Commissions.
- Report to Disaster and Emergency Scams: Some countries also have emergency scams reporting facilities. Therefore, the victims can contact the centers and seek financial support.
- Hiring Fund recovery companies: Firms specializing in fund recovery can speed up the victims’ case. They can compile the reports against the mining scammers, provide emotional support, and guarantee maximum money retrieval.
Also read a related article- How to find reputable bitcoin recovery companies?
Fortunately, technological advances in the crypto space have made it possible for cyber security experts to retrieve lost funds from victims. These companies offer legit services aimed at recovering the optimum amount of money. The services also help victims spot the companies trying to take further advantage of the victims.
Quick ways to identify fake fund recovery companies are:
- Guarantee total amount recovery: When a company promises complete fund recovery even before they have begun their investigation, it is most likely a scammer.
- Less information on the website: In most cases, fund recovery companies take great pride in possessing a team of experts. And it is most likely an act that they never miss out on honing their experience on their websites. So, when someone finds this vital information missing, they can be scammers.
- Lack of legal support: A few meetings are usually enough to give a hint of whether the fund recovery service has good legal support or not. When identified, the victims should back out from paying any payment.
- Lack of Experience: A gander at the company’s background detailing the years of their presence in the industry gives a general idea of their expertise. Find out the year of inception, years of service, team members, etc., to ensure connecting with a credible company.
What is Bitcoin Mining?
Cryptocurrency mining is the process of converting the small amount of computer processing power associated with a particular cryptocurrency into money. A cryptocurrency miner is typically a person or group of people that create transactions and work to increase the network’s efficiency. They’re in it for the money. Cryptocurrency mining is typically done by running a computer program. A person or group of people could be running a computer program or they could be buying a mining service, which helps them purchase the computing power needed to mine a cryptocurrency. Typically, you need about 30-50 gigabytes of storage space to run the mining program, and the mining results are then sent to the person/group of people running the program.
Bitcoin Mining Scams
Bitcoin mining involves getting computers to do complex calculations to “mine” for the digital currency Bitcoin. Bitcoin mining was initially supposed to be done in a decentralized manner, by users, as more and more computers were added, but it now often takes the form of organized, commercial operations.
It’s basically a lucrative business — but if you’re an uneducated investor looking to make a quick profit, you could be scammed. And you may not even know that you’re the target of a scam. Here are a few tips to mine bitcoins safely:
How to Recognize Bitcoin Mining Scams
There’s a lot of conflicting information about how Bitcoin and cryptocurrencies work. If you’re not sure what cryptocurrency is, or how you can invest in cryptocurrency, these five tips will get you started:
1. Bitcoin is not a currency
Contrary to popular belief, Bitcoin is not a currency in and of itself. Bitcoin can be used to buy items and services, but it’s not a true currency that you can use to pay for goods and services.
Instead, Bitcoin is an “cryptocurrency” or digital currency. Cryptocurrencies are not regulated by the Federal Reserve, the IRS, or any other government agency.
How to Avoid Bitcoin Mining Scams
Bitcoin and other cryptocurrencies pose an economic threat to many countries, but most people don’t know about the dangers of bitcoin mining scams, nor how to protect themselves. Many bitcoin miners are manipulating the Bitcoin blockchain to make money, which means they’re stealing funds from legitimate Bitcoin miners. The easiest way to avoid this problem is to invest in a cryptocurrency that you know isn’t being mined by shady miners.
Here are two signs that cryptocurrency is being mined by a scammer:
1. Scammers will not answer you.
2. If you’re contacted about buying “bitcoin mining equipment” or paying for Bitcoin mining fees.
these are signs that the caller is attempting to take your money or Bitcoin in return for nothing.