We have already done articles on bitcoin cloud mining and also bitcoin mining in South Africa,  and other bitcoin schemes in South Africa, and how it is NOT something people should rush into.

Please beware of any scheme in the name of bitcoin, mining or cryptocurrencies which assure any form of fixed return. No fixed returns are possible. If any company is assuring fixed returns, we believe its a Ponzi / Multi Level Marketing / Network Marketings scheme, or a scam.

Bitcoin mining schemes in South Africa

bitcoin mining scam south africaThere is a bad trend growing in South Africa, and that is of the Network marketing / Multi Level Marketing / Pyramid scheme / Ponzi (call them what you will) quacks, who are using bitcoin hype to make money off unsuspecting and ignorant people.

Many South Africans are looking for a way to make more money, a passive income, or to make their retirement dream come true. Now that bitcoin is in the media a lot more, and the price has been going up a lot, people are eager to learn and find out how they can also benefit.

We have a growing problem where more and more of these guys who brand themselves as Entrepreneurs, Network Marketing Professionals, Investment advisors, and “wealth gurus” are pushing their ‘bitcoin mining’ plan onto their easily influenced followers. These are mostly ponzi schemes disguised as bitcoin mining schemes. Members watch videos and presentations on bitcoin, and how great it is, then are sold the ponzi disguised as bitcoin mining.

Please don’t fall prey to these bitcoin mining schemes!

These quacks claim that they are not ‘cloud mining’….so they are legitimate as they ‘own a real bitcoin mine’. Well if they do own a bitcoin mine (They cant prove this), then I beg to differ, as what they and their followers are doing is the very definition of cloud mining!

Cloud Mining is the process of bitcoin mining utilizing a remote datacenter with shared processing power. This type of mining allows users to mine bitcoins or alternative cryptocurrencies without having to manage their own hardware.

The hunter and the prey

Bitcoin mining south africaThese guys have very little real understanding of how bitcoin and bitcoin mining works, but they know enough to boggle the brains of desperate people who are eager to make money and ‘get in’ on bitcoin.

Watching the Youtube videos these guys send out to their followers about bitcoin and mining bitcoin is crynge-worthy and laughable at the same time, but also very scary when you consider real people are listening to these quacks.

The main thing to understand, is these guys all make money from recruiting more suckers to do ‘bitcoin mining’ with them, and having a large following of eager members is a great way for them to make some serious cash.

These parasitic schemes need people to invest AND continue to re-invest their money, as well as recruit others to the so called ‘Team’ in order for them to continue making their money. Once they have your money, they don’t want you to ever take it out….if everyone did that, the system would collapse really fast. So you are encouraged to automatically re-invest anything from 35% up to 100% of your mining ‘earnings’ back into the system. This is a TERRIBLE idea!

Bad bitcoin advice

These “Team leaders” as they call themselves, travel around South Africa and the rest of the world, holding meetings where they spend time telling people what bitcoin is, and then convincing people that mining bitcoin with them is the BEST way to get involved with bitcoin, and make money. This is NOT TRUE!

It is a great way however for these “Leaders” to make money from recruiting members into the mining scheme. It is in their financial interest to promote the scheme, and to not listen to people who point out that it is a bad idea.

Bitcoin is incredibly volatile, is a risky investment, and you should take extreme caution. Know the facts….it is a bad idea and reckless to take an already risky investment such as bitcoin, and introduce even more risk, by investing it into bitcoin mining schemes. This is especially true when you have little knowledge of the industry and the technology and rely on the word of a “Team Leader” for direction, who’s paycheck depends on you investing.

These guys do cover themselves all the way by insisting that people should never invest more than they can afford to lose, and that figures shown don’t guarantee profits etc., but then they hard sell the mining in the next breath.

Bitcoin mining investment truths

  • With cloud mining, you are at a 100% loss from the moment you deposit your bitcoin…its gone.
  • Not until such time as you have earned and MOST IMPORTANTLY, withdrawn out of the system 100% or more of the bitcoin you deposited, are you in profit.
  • If you are really mining bitcoin with your own equipment on your own premises, even with the best hardware, it will take you many months to break even if you are lucky to do so, and even longer if you are cloud mining. Fast returns are a red flag for a scam.
  • If you do manage to break even and turn a profit, even with the latest greatest equipment, profit dwindles to zero pretty fast due to the ever increasing bitcoin difficulty.
  • By constantly re-investing your mining earnings, you are constantly staying at a loss as you move the bar to break even and turn a profit further down the road.
  • Scam websites are designed to keep you re-investing, because that is how the matrix / pyramid / multi level marketing / ponzi system can run for longer. Your balance on the mining website is numbers on a screen….
  • If there is a multi-level / matrix / binary tree / pyramid shaped, structure for incentives or earnings, it is more than likely a scam where late joiners will lose their money once the system crashes.
  • Members sometimes need to buy a ‘licence’ to use the bitcoin mining pool, this is instant profits lost and moves the date that you finally turn a profit far down the road before even starting mining.

So called proof and credibility of cloud mining

Bitcoin cloud mining South AfricaMost of these groups are quick to shout and scream that they are NOT cloud mining, even though if they did have a mine that is exactly what they are doing by definition?!

For arguments sake, assuming they really do have a huge bitcoin mine, why is there no real 100% proof of this? These guys are eager to show photos or videos of a small scale bitcoin mine with them on the scene, but this in itself is not real proof, as many scams do a small amount of token mining, if only to be able to claim legitimacy.

In any case, anyone can visit a bitcoin mine, and they do! The web is filled with videos of people ‘visiting their bitcoin mine’ on Youtube. This is because it is in the interest of ponzi scheme mine operators to get as many customers as possible. They will gladly let almost anyone make a video so that they can get a ton of new sign ups. This just does not cut it especially when millions of Rands worth of bitcoin is involved.

Proof of bitcoin mine ownership would be crypto and real world things like:

  • Audit of the mining equipment at the mine. How many miners, types and models and total PH / TH / GH that is mining by independent 3rd party.
  • Mining pool and username on pool so that the amount of bitcoin claimed being mined daily can be verified
  • A Securities Exchange License
  • Audit of number of members and corresponding hashing power to correspond with bitcoin being mined and equipment on farm and electricity usage. (Electricity bill with the names of the business or members that reflects the amount of power consumption required to power the equipment in the audit)
  • A bitcoin transaction to be done from recently mined block to verify it is new bitcoin, and was mined by specific user at specific pool
  • Signed bitcoin transaction from the address used in the payouts at the mining pool in the audit
  • Legal company registration documents in the country showing the names of the members, including tax filings bearing their names
  • Land ownership documents / lease agreement showing the name of the company or members names
  • Bank account in the country showing the names of the company and members

A website is not proof, anyone can make a website. A video is better, but still not 100% proof as it does not tell the whole story. Often scripted, they only tell the potential investor what they need to hear to willingly invest.

During the American gold rush, most of the money was not made by the miners, but by the guys selling the picks and shovels….

Bitcoin mining gone bad

So since bitcoin cloud mining is essentially not profitable….how do these guys claim to make so much money….the answer to that, is the ponzi scheme side of the operation.

Suckers are duped into investing money, and the scheme uses newly invested funds to slowly pay you out over time.  Recruiting needs to continue for new members to ‘invest’ so that older members can continue be paid.

Members recruit others using their unique link to ensure they profit from each new person they recruit. The main “Leaders” hold conferences around the country to constantly recruit new users below them, and continuously encourage members to do the same, and praising them publicly about it when they do.

The hashing power of the mine is not proven to cover the hashing power all the members have paid for, so often members are paid bitcoin as mining profits, which is from new member investments.

Members are encouraged to re-invest mining ‘profits’ up to 100%….as long as you keep re-investing, the mine continues to recycle so called profits among members.

The mine wins ultimately as often these companies sell fake hashing power over and over to groups of people who all think that they are the primary customer of the bitcoin mine. Since it is often a ponzi, the mine recycles the bitcoin round and round between the customers who all think they own the mine.


Bitcoin South Africa

The best bitcoin investment secret

So if mining bitcoin is risky and not a great investment into bitcoin, what is better….simple JUST BUY BITCOIN, then, DO NOTHING!

Over and over again, since bitcoin began, the absolute BEST investment has been to buy bitcoin, secure it safely, and do absolutely nothing. By doing nothing with your bitcoin, you don’t have your funds tied up for months or years while you try to break even or make a profit.

You are able to take advantage of price fluctuations if you wish, selling bitcoin to cut losses if the price is tanking, then buying back at a lower price to increase your bitcoin holdings!

By doing nothing with your bitcoin you are not at risk of any mining company disappearing with your bitcoin, or run the risk of not breaking even in some cloud mining scheme.

Hold bitcoin

Network marketing leaders want you to rather invest your bitcoin in their mining farm because it benefits them financially if you do. There is zero money it it for them if they suggest that their followers go the less risky route, and just securely hold their bitcoin.

Why invest your bitcoin in cloud mining, put it at high risk, lock it up so that you cant do anything except wait months to possibly break even, and then, be in the same position as you are now, except the price of bitcoin would have probably gone up significantly?

It is a far wiser investment to rather buy bitcoin NOW, hold onto it. Less risk, less fuss, less worry, more options for trading and profit.

Please note that we are NOT associated in any way with the following bitcoin cloud mining services included below:

Skill dragon / Dragon mining / Galaxy Lifestyle mine, Bitknock, BitClub Network, Hashflare, ASSOMiner, Bitcoin Max Profit, Chabat Mining, Coince, Gainbitcoin, GAW Miners, Gemcoin, Group Bitcoin, HashOcean, MMM, PB Mining, UFOMiners, ZenMiner

20 Responses to Caution: Bitcoin mining schemes in South Africa
  1. Schalk van der Merwe March 14, 2017 at 7:11 am Reply

    Hi, has anyone ever heard of or tried Hashnest? A friend of mine who’s been a miner for a few years says this is one of the leading manufacturers of bitcoin mining equipment and it is the only one that stands a change to offer a return. I want to see if others also have this experience and opinion.

    • Hashnest is the cloud mining operation by Bitmain, who manufacture the AntMiner bitcoin mining equipment. By using hashnest, the idea is that you get the latest equipment direct from the manufacturer who plugs it in directly into their network and pool (I think its antpool), and use their cheap electricity. I dont know anyone personally who has used them yet.

  2. Bitcoin mining is not a long term investment at all. Bitcoin mining hardware lifespan is a few months, if you are lucky maybe a year before it is non-profitable, depending on what hardware you are using. This is before you have even taken your running costs and pool fees etc into consideration. People are tricked into bitcoin mining schemes every day. Maybe you should read this post http://www.bitcoinzar.co.za/bitcoin-mining-south-africa/
    It is simple to work out how long your miner will be profitable based on the investment, running costs, and average percentage of profit you lose every 2 weeks with the difficulty increase. It is a no-brainer….mining is high risk, low reward or no ROI. It will take you months to break even if you are lucky….and after you have done that, you might never mine enough to reach your initial investment amount. Why not just buy bitcoin with the initial investment amount…you INSTANTLY have more bitcoin that you will probably ever mine after breaking even, and you can ride the wave up as the price increases, or sell instantly to cash out….something you cant do if you start mining. Be smart….dont be tricked.

  3. This is really the truth, I have been scammed by such a cloud mining company last year on the advice of Coert Coetzee, the owner of Treoc. Him and his partners off course made good money through all of this and lots of other people lost money. Since then I have only bought Btc and hold. Through that I have recouped all my losses and in fact made more money

    • Most cloud mining websites are just pyramid schemes, so it is common for people who have a large following of ‘disciples’ to use this type of cloud mining website. They of course will benefit from every user they sign up.

    • Lourens du Plessis September 4, 2017 at 8:13 pm Reply

      Can you explain or recommend how to just buy Btc and hold please. Ive been researching bitcoin but right now every site etc. seems suspect of being a pyramid scheme. Much appreciated.

  4. Thabang Nelson Hlao July 7, 2017 at 6:18 pm Reply

    This is an eye opener for me guys. I always wondered why should I signed up people to make money after investment? Worse even my Wealth Coach from Work Your Wealth lead by Conray say I must sign up all my family under me to build a team.

  5. why is bitclub network on blockchain.com if they do not have a real mining facility?
    Blockchain recognize bitclub network as a mining pool and NOT cloud mining, and you?

    • Blockchain.com does not list companies based on weather they are cloud mining or not. Bitclub is a cloud mining company that ALSO has a mining pool. Just because a company has a mining facility does not mean they have the hardware and infrastructure to account for all the bitcoin. Just because a company is listed as a pool or a mining facility anywhere does not make them legit. Even getting a paid by a cloud mining company does not make them legit, many pyramid and ponzi schemes pay out, until they dont. You have been warned…

  6. Good Question, i’d like to know the same, which are legit cloud mining organisations, and thoughts on lifestylegalaxy?

    • Dont bother trying cloud mining, the ones that are legit are really not that profitable. I think Lifestyle Galaxy is the same as Dragon mining, they might have changed their name again, it looks like all the same people….We still waiting for them to answer our questions, but they flat out refused, and then deleted their posts so that our questions were removed a few months later. By the magic of the internet, we still have a record of it though, you can read them here: http://imgur.com/a/TuvuC

  7. As a general rule in bitcoin cloud mining is not really that profitable if it is legit…..if you really want to mine get your own hardware. The internet has tons of articles explaining why cloud mining is not profitable, or riddled with scammers and pyramid schemes….let that be a warning to you, stay away from them. If you really really really want to do cloud mining, Genesis mining is one of the most reputable ones, but even they are not that profitable, since they have real costs and they dont run a pyramid scheme to generate more profits.

    As another general rule in bitcoin, DONT store your bitcoin on an exchange…To hold your bitcoin securely, the best route for most users is to get a hardware wallet. The next best is to use a desktop / web bases / or wallet app that you control the private keys for.
    Luno with two factor is fine for small amounts of value for most people. If you have bitcoin of any significant value, get a decent wallet and move your bitcoin off the exchange, then keep your private key for the wallet safe. Good wallet for web: http://www.bitgo.com, good wallet app for phone: Airbitz, Good wallet for desktop: Exodus.io

  8. I think you would need to do a withdraw from your bitcoin wallet on their website, to your Luno bitcoin wallet. I dont know if you will be able to get your money out easily…many of these schemes make it extremely difficult to get your money out, and very easy to re-invest…the idea is to make you keep your money in the system. Let us know how it goes….

  9. Did they let you withdraw your money?

    • I happened to have attended one of Lifestyle Galaxy information sessions /
      recruitment outreach (in collaboration with Coert Coetzee of Treoc who also
      gave a presentation on Trusts, Income Tax & CGT implication of Bitcoin
      mining earnings and value appreciation & how to structure
      earnings from Bitcoin. It was informative) at Century City Convention Centre
      this past Saturday 23/09/2017 and they clearly indicated that buying a bitcoin
      mining unit and its inherent hashing power is definitely not refundable. All
      you have is the standard cool off period you get as with i.e. purchasing a
      fridge at Massmart / Game Stores as prescribed by the consumer protection act, which i think is about 5 days. I’m not even sure if they will indeed honor that
      promise. My biggest concern though is that they don’t seem to be regulated.
      They have failed to prove to me that they are held accountable by any
      regulating body recognized by the Financial Services Board or A Securities
      Exchange License of any sort. All they keep talking about is a ‘due-diligence’
      (whatever that’s supposed to be) which they embark on before opening a
      branch or ‘legitimizing’ their operations in any country, which says
      nothing about how safe my money is with them, but how lucrative /
      profitable the country or area will be for them, not withstanding
      that the Bitcoin space is volatile and the risk is huge. They seem much like a
      risk-double-dip; an additional risk on a readily risky landscape.

      Anyways, i came to this website in search of reviews on Lifestyle Galaxy and i’m ever thankful to @bitcoinzar:disqus for elaborating on the risks of Bitcoin Mining. I can thank you enough for confirming my suspicions ans sparing me my the loss of my hard earned money.

      All the best to everyone whom like me is looking for legitimate and somewhat safe means of generating passive income. My the forces be with you.

  10. If you had taken the amount of money you invested……and just bought bitcoin…….you would have a LOT more than double your investment in 14 months. Bitcoin was about R9k a year ago, its about R115k today. The percentage increase is not only 100% or double….do you get it now? The difference in what you could have made, and what you have made is crazy….you just gave away a ton of money.

  11. From what I understand it is a pyramid scheme that might also have some real mining equipment. Someone from there did come to this site and claim we did not know what we were talking about and insisted we answer all their questions, which we did.
    We then gave them a bunch of questions to answer to try and prove the legitimacy of their operation, and they flat out refused to answer any of them. They then deleted their posts of the site.
    That behavior makes me think they are some sort of scam, after all, if they would have just answered some of the questions, they would have legitimized themselves easily. Right now I have zero reason to believe they are legit, that opinion could change with evidence, which they refuse to supply.
    I still believe that while bitcoin is going up in price fast, it is far more profitable to just buy bitcoin and let the value of that appreciate. Bitcoin has increased hundreds of percent in the last 12 months…far better value than any cloud mining contract.

  12. Mike, if you are happy with a tiny percentage of money from your investment, as opposed to the amazing amount of money you could have made, so be it. Your bitcoin earnings constantly declines, and re-investing is signing up to more tiny profits from your re-investment capital. If you think you are making money now, you should work out how much you could have made….

  13. Personally I dont trust them at all 🙁


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