Oddbean

I don't often talk about this, but with Swan's dive into what is essentially cloud mining, I felt it would be good to discuss this. About 3 and a half years ago, I decided to mine Bitcoin at home on a small scale. The goals were to deal with noise, heat, and to learn. I ended up heating my house for the entire winter (an all winters to follow) with Bitcoin. Eventually, I wanted more hash power and started to look into options. Lord Fusitu'a (RIP) saw my Twitter discussions about wanting to buy S19s and DMed me about it. He said that I didn't have to buy S19s and that their was a better way to proceed it I wanted to learn more. He introduced me to a company called VBit. They were a cloud mining company that sold hash power in different increments. 33 TH, 66 TH, and 100 TH. They supposedly had facilities in the US mid-west and in Canada. They were a Philadelphia company! Go Pennsylvania! I was skeptical, so Lord invited me to on of their meetings to be transparent. My takeaway from the meeting was that this was essentially the Amway of Bitcoin mining. It was a MLM with sales tiers, partners, and referrals, everything MLM! Very shady. I asked Lord about this and he said that he's vetted them and been mining with them for 6 months and has on-boarded many Tongans to this company. He said I could just mine and not participate in the MLM portions of the company. He said many people did this. Again, I was skeptical, but I really wanted to get an S19 and start to mine at a larger scale. It was hard to get an S19 now, with many being in backorder, so I decided to move forward. I purchased 100 TH, an S19, for $12,000. I was able to mine with the hash that I wanted and not have to worry about dealing with the excessive noise and incredible heat production in the summertime. Because I was skeptical, I didn't use bitcoin for my purchase. I used a credit card. I knew if I had a problem, I could get my money back. Or at least I had hoped. Everything was great for 5 months or so. I was getting monthly payouts. I was happy. And then the Shitcoins started to blow up in May and June of 2021. It turns out that VBit was leveraged and trying to earn yield, with customer's funds, at Celsius or another entity that blew up. But no one knew this for months. All payouts stopped. Zero communication. The company CTO left. The CEO was unable to be found. And then the company changed from names from Vbit to Advanced Mining. 🧐 Well, that was enough for me. I contacted my credit card company and was able to get $9,000 back. Advanced Mining settled with me, saying that I had made $3,000 worth of BTC withdrawals and they didn't need to reimburse me for that. I was was happy with that outcome and wanted this over and done with. I found a couple Advanced Mining support groups on Reddit and Telegram where so many regular people, that weren't Bitcoiners in the same capacity as me, were completely rugged. Advanced Mining has since been investigated by the SEC and sued in several states. I don't know what's been going on with them over the past year and a half. I stopped paying attention to them once I was out and happy. My entire point here is that if it's not your physical device or your hash power, there's a major risk. Please be careful out there.

That's why I was so skeptical. Probably since this company had an article in a Philadelphia newspaper about bringing Bitcoin to Philly was part of the reason I decided to ignore my gut feelings. Oh wow they're from my state 😂

I didn't know Lord died 🫣 Besides, last winter I was using an S9 for heating too and I couldn't care less about the sats but for keeping the house warm, especially as for some months the regular heating was not working properly or in parts at all.

Yeah, back in February. He has cancer and has been in the hospital for years. I had a few voice calls with him whenever all of this was going on. He seemed to always be in pain, so I'm glad that he's able to rest now 🥹

I’m curious if you ever looked into sazmining Derek? Not trying to sound like a lousy salesperson, (and disclosure I do promo codes for them via the pod but don’t do any direct sponsorship/payment outside of that). I get the risk though, for most it’s still unimaginable to mine from home. I’ve been a customer with sazmining since January ‘23 when my rigs started hashing and it’s been a really good experience. But I only recommend it to people who do their research and understand timing of all these things (good rig price, good power price, uptime, etc)

Oh man I had no idea Lord passed ;( he was a funny dude and entertaining to listen to. He seemed to have a firm grasp on bitcoin and could articulate it well. We followed each other on Twitter and he’d often retweet me - as he did so many others. Sad to hear this news.

I liked him. He was always very active. I assume the Tongan Bitcoin initiatives have stopped since his passing. The plan was to recover from their Tsunami and once stable use Bitcoin to grow economically.

Not a hashing board in your physical possession, not your hashrate! GAWsome! (OG cloud mining scam reference) nostr:nevent1qqsr7glcak5ck9g3dxj896p5yjavsuu05zdq99qtft73vrs5l5k6negpz4mhxue69uhhqatjwpkx2un9d3shjtnrdaksygplwuxkt5a8vj5utj6s8tsj8e3wcavc45p4mqmw92qs7wrh5azmyspsgqqqqqqsd98gfv

yeah but not on the cloud. As you have said, it's mostly MLM. pay the users (for x time) with the money new users deposit, while expanding your own hardware (or while investing the users money elsewhere). Printing your own money is probably one of the coolest things you can do. Thinking that you're printing your own money, not so much.

Glad you got a majority of it back 🙏 I wrote up an article on full node running in the cloud and came to a similar conclusion https://bitcoinconsulting.us/blog/running-a-full-bitcoin-node-aws-vs-gcp

Hey Derek - I agree with you that cloud mining is not good. Swan Managed Mining is not cloud mining. This is a bespoke service to manage operations at scale for large institutions (several MWs per investor). These investors get a clear view from ASIC acquisition all the way to hashing. Transparency on everything. They see pools, wallets and can track in real time the operations. Also, by definition, their risk on individual machines is massively pulverized. Swan gets a management fee for the services. We announced a deal with Tether and we’re managing a lot of their hashrate. Large capital allocators don’t necessarily want to pool their capital with pre-existing mining operations, nor are they able or interested in acquiring all the skills, talent, experience, and time to learn how to stand up their own mining operation. This is where Swan Managed Mining comes in. Really sorry to hear about your experience with retail cloud mining, we’re very aware of those operations, and SMM is not that. More here: https://www.swanbitcoin.com/swan-announces-managed-bitcoin-mining-service/

Hi. Thanks the explanation. Does Swan own the ASICs or does the customer they're being managed for own them? What happens to the equipment if Swan goes under? If the facility or hosting company goes under? Worst case scenario does the customer get the equipment shipped to them? That's what was supposed to happen to me and others, but did it not in th VBit situation.

not your keys message rings out again. wait for the rug to be pulled from ETFs next. education is critical for everyone's future. for those who live in the warm is there such a thing as BTC air conditioner miner? GM 🙃