Cloud Mining with Genesis Mining: Good, Bad, and Ugly

“Cloud mining”… these words alone are often enough to stir up a frenzy of controversy in the crypto asset realm. In this three-part series, I’ll look at a few of the biggest cloud mining services providers, starting with Genesis Mining.

The Reputation of Cloud Mining

Are cloud mining companies actually Ponzi schemes? Are they run by scammers who aren’t really mining and will one day disappear and take all of your investment with them? Even if it is a legitimate operation, will you ever make a profit, let alone break even?

With cryptocurrency scams running rampant, it’s important to do as much research and due diligence as possible before investing your money.

genesis mining

The Mysterious Genesis Mining

When most people think of cloud mining, for better or worse they think of Genesis Mining first. They advertise the most, they are talked about the most, and their affiliate program litters the web with three percent discount codes as far as the eye can see.

This company has recently fallen on some very difficult times as they suffered a massive hack to one of their hot wallets, causing all customers payouts to freeze for more than a week for most users, and even longer still for others. Then, to make their relationship with their customers even more tenuous, the Bitcoin/Bitcoin Cash fork started, and they again froze all payouts for several days to a week. Following this, they then claimed to be suffering from “bugs” which are still affecting payouts.

Prior to this, however, Genesis Mining was considered the gold standard of cloud mining. Users claimed that it was fair, transparent, trustworthy, just generally accepted by those interested in cloud mining. Genesis Mining shares pictures and videos of what they claim is one of their mining centers, and for many potential customers, this is enough proof to sign up.

How Does Genesis Mining Work?

Let’s get into how their offerings work. If you purchase a Bitcoin mining contract, you are told that it is “open ended,” meaning that it will only end when it is no longer profitable. This could be decades, years or just months from now, and Genesis Mining does not make it clear what they will do once they reach this point. They have an explanation on their site, but it is severely lacking in clear details.

Their contracts for other algorithms such as X11, Scrypt, and Ether, are sold in 2-year increments, but again are unclear as to what happens if they too become unprofitable. Open-ended contracts are charged daily maintenance fees, while time-limited contracts supposedly aren’t. There is no way to verify this, however. You are simply given whatever they want to give you, and you have no recourse or ability to ask how your payout was calculated.

Another thing to consider is that any money you spend on a Genesis Mining contract is gone forever. You cannot get out of your contract. You cannot sell your contract. You cannot move your hash power to a different algorithm. You cannot get a refund. You are simply stuck with it.

Genesis Mining Fees and Payouts

Genesis Mining charges a fee to their Bitcoin contracts, which they claim is 0.00028 per gigahash per day. An average customer with a mid-range contract would expect to have perhaps 2500 gigahashes per second.

That would mean about $0.70 per day. I had a chat with a Genesis Mining customer on Reddit who has a 2500 gigahash contract, and he told me he receives about $1.50 per day payout, plus or minus thirty percent. Of the total $2.20 that he supposedly earned, Genesis Mining takes a whopping 31% per day. Whether this is fair or not is up for debate and largely a matter of personal belief.

Genesis Mining also pays out only once per day, and they give you no information as to how they calculated your payout.

Have a question for them? Their customer service is dreadfully slow, and you are very likely to just get a form letter several days to a week or more after you contact them. My contact from Reddit had contacted them recently, asking them to explain how his payouts were calculated, and all he got back was a form letter six days later.

A Look at the Background of Genesis Mining

The company may appear a little odd in terms of how they behave, but what about the company registration? Is it really an Icelandic company?

This is where things get very strange. According to their website, Genesis Mining is registered as a Hong Kong company. I can tell by the address that they have registered an address and nothing else.

Many companies, especially ones from mainland China but potentially from anywhere in the world, register shell companies in Hong Kong but do not really have offices there with people inside. This is usually done for tax reasons, as Hong Kong is very business-friendly. However, in some cases, this has been done in the past to make it harder to track down who actually owns a business.

What I found very odd about their address – specifically the 31st floor of the Chinachem Century Tower in Hong Kong – was that just googling the word “Chinachem tower” came up with hundreds and hundreds of companies all registered to the 31st floor of this building.

All this does though is reiterate my point that Genesis Mining does not operate a real office space with people working there. It’s just a registration address and nothing more. The truth of the matter is that we know literally nothing about Genesis Mining. We do not know who owns them, what country they are really based in, or quite frankly, anything at all besides what they write on their website.

Genesis Mining also loves to tout their Icelandic mining farm, but state that they have operations in other countries including China. They do not provide any other details beyond this, only including the following statement on their official page:

“These Bitcoin mining farms represent only a fraction of the farms we own. The other Bitcoin mining farms are not shown because customer protection and security are a high priority for us. We can only set up video cameras at locations that are not critical and we do so without disclosing sensitive information or critical intellectual property.”

In other words, the Icelandic operation, by far the facility most boasted about, is not defined as “critical” at all.

On their contact page, they list an Iceland address and list it as an “agent”, which is a code word for another company. Below that they list another address in Iceland and call it an “Operational address,” which again just means that they supposedly operate there.

Final Thoughts on Genesis Mining

What’s the main take away from all of this, you ask? All I can say is that Genesis Mining is a mysterious company, and it’s clear that they want to remain that way.

The Good

  • The website is easy to use, and loads quickly
  • The website seems more approachable to beginners
  • You can choose to be paid in various alternative assets like Litecoin, Monero, and Dash

The Bad

  • Only one payout per day and the site suffers major payout delays at times
  • No payout transparency, no demonstrating how your payout was calculated
  • There is a large delay in changing your payout after you buy more hash power, often 48 hours or more
  • Their affiliate marketing can be incredibly annoying, and you have to find an affiliate link to use each time you buy or else you will pay a higher price

The Ugly

  • Once you pay, your money is gone
  • They seem very prone to technical issues and payout gaps
  • Highest maintenance fees in the industry – 31% for Bitcoin contracts
  • The company itself is an enigma wrapped in a mystery

Comment (1)

  1. ARKONIX Aug 08, 2017

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