Over the years, cryptocurrency—once an exclusive and fringe sector—has become a multi-trillion dollar market and has courted the interest of millions of mainstream traders and investors. The industry gained more mainstream recognition following the COVID-19 outbreak in 2020.
With the boom of the crypto industry came numerous opportunities for earning active or passive income. One of the popular passive income ventures in the crypto industry is crypto mining, which involves the solving of mathematical problems to confirm crypto transactions and earn rewards. Most miners typically join mining pools to broaden their capacity to solve more blocks and earn more.
However, this sector has become significantly riddled with malicious actors who lure unsuspecting victims into fake mining pools to hoodwink them of their funds. These scams have become somewhat of an epidemic in the crypto space today, especially on social media.
The Crypto Mining Sector’s Evolution: Why It Is a Hotbed for Scammers
As mentioned earlier, cryptocurrency mining involves the application of computing power to solve complex mathematical problems that verify crypto transactions for small crypto rewards. A common strategy in the mining sector is pooling, where miners pool resources and computing power to solve more blocks and earn more rewards and reputation. In mining pools, miners get rewarded according to how much work they contributed to solving a block.
Like how on-premises data center computing evolved to cloud computing, mining pools have also evolved into cloud mining. Instead of bearing the costs of purchasing, setting up, and maintaining a mining rig, which attracts high electricity bills, cloud mining allows miners to rent computing power for their mining operations. Simply put, cloud mining is the rave of the moment in the mining industry today.
While cloud mining allows users to mine crypto in a stress-free and efficient setting, it also introduces several cybersecurity risks. Due to how easy and quick it is to create a crypto mining service, many scammers have infiltrated the industry, looking for unsuspecting victims. One of the most common forms of these scams comes in mobile apps, many of which get heavily advertised on Twitter and other social media platforms.
That said, one of the many dangers of mining scams is how difficult they are to differentiate from legitimate ones. Also, mining scams fall into an already technically demanding mining practice, making it easy to hoodwink newbies or inexperienced miners.
Meanwhile, legitimate cloud mining pools are usually buried under a pile of “fly-by-night” operations on search results. Identifying the legit mining pools can be tasking and requires in-depth sifting through Reddit and other crypto community forums. As the industry becomes more competitive, going with established brand names is the wise thing to do.