Excerpt
I discuss the different ways to mine Bitcoin and dive into whether cloud mining is a legitimate option or just another scam. I also talk about Blockstream’s Mining Note as a potential alternative. Watch now to make an informed investment decision!
Transcript
Mining Pools
There are different options to do Bitcoin mining, and I think one of them is really a scam very, very often, but let me get into that. So, the first thing is, what are mining pools?
Mining pools are basically software in the cloud where people who run their own mining machines can pool together their hash rate, meaning within the pool they then have a higher chance to find the next block. When the mining pool finds the next block, the block reward the pool receives is being split, and the miners in the pool all get a small share of the reward according to their hash rate that they put into the pool.
So, this is Bitcoin mining in a pool. You need your own hardware for that, and you need your own source of electricity for it, which has to be very, very cheap otherwise, Bitcoin mining will be more of basically spending money and not earning anything back because the electricity is too expensive for the rewards you might receive. So, that’s totally legitimate.
There are a lot of these pools, like Slush Pool, Antpool, F2Pool, and others, but as I said, you need a higher amount of investment — at least, I’d say, a couple of mining machines to become a part of that and earn bitcoin block rewards.
Blockstream Mining Note
And then there’s another opportunity, but for that, I believe you also need to be able to invest a high amount upfront. I don’t know how high or where the entry limit is — I don’t know exactly, to be honest — and you also need to be an accredited investor, so it’s more like an investment team like we have in the current financial system.
So, what it is, is the Blockstream Mining Note. It’s actually a great tool because it’s based on new technology. Blockstream has built basically the Liquid Network, which is a sidechain of Bitcoin, and on that network, they can issue tokens. So, anyone can issue a token on Liquid, and this is the so-called Blockstream Mining Note.
So you can invest, and you buy these tokens, but you have to KYC for that because it’s an investment, a regular investment, and then you can earn rewards because Blockstream is building mining farms. So, they are basically mining for you; you invest in those mining farms with the token, and then you can sell the token on the market again. So, this is another option, which is legit.
Scam Mining Schemes
But then, what you were talking about — there are a lot of offers that you can find on the web, or you receive it in your inbox or spam anywhere, which tell you you can invest in mining now, and these are mostly scams.
It’s not easy to mine; you need investment, you need time, you need proof-of-work in that sense. So, these schemes are mostly scams. I don’t have any examples at the moment, but from the days I have been in Bitcoin, in the last couple seven or eight years, I always came by these mining schemes where people asked me, “Is this legit? Can I do this?” And I say, “No, don’t do this. I don’t trust it, and you shouldn’t either.”
Miner Rental Schemes
There also have been other mining investment opportunities recently where you could rent miners. I’m not sure if this is still existing but there have been one or two of these projects, and I can’t remember the name now, but one of them went down. They had to close their endeavor again because that was all in the last couple of years with the FTX downfall, and a lot of other investment companies came down too, and I think with them, also this “you can rent a miner” project.
