Everyone should be wary of scams on the mining hardware market. They seem to be proliferating. These scam sites possess a thinly disguised veneer of legitimacy. They appear authentic and honest. Without some technical acumen or knowledge of red flags to investigate, anyone can become a victim.
Potential buyers are not the only victims, though. News organizations and other websites have unwittingly advertised hardware scams in their press releases, within news articles, and as popup ads on their pages—which puts more people at risk.
For instance, Cryptocoins News published a press release on May 15 purported to be placed by Knc Miner… but the company has harbored a questionable reputation ever since before their bankruptcy proceedings last year. Coinmarketcap.com also posted a random ad popup for Knc Miner, and Cointelegraph also published a version of the press release.
Prior to delving more into this KnC mining quagmire, what are some potential hardware scams customers or news organizations should be knowledgeable about? What should customers and other organizations look for that demonstrates the mining emperor has no clothes? What are the red flags?
Potential Hardware Mining Scammers and Red Flags
The commonality among these hardware scams is they offer deals or technology that is too good to be true. Everyone who mines bitcoin, Litecoin, or any other cryptocurrency wants the best possible equipment for the most affordable price. However, buyers and other interested parties should be wary about these deals. There are several red flags that indicate these pieces of hardware probably do not exist and companies who purport to sell them are likely fictitious.
Foxminers said their equipment can mine both Scrypt and Sha 256. This is supposed to be the first dual-mining hardware. However, there is no known technology in existence, and no one has come forward with a machine running this capability.
Their website buy screen says, “Chip Quality: 28nm SHA-256 & Scrypt Dual ASIC Designed By FoxMiners.”
Jamie Redman, writing for bitcoin.com, also examined their fraudulent activities. He said, “Unfortunately for the company, according to a scam warning on the forum Bitcointalk.org users have found issues with Foxminers claims. For instance, the spec sheet provided for the FM9800-XD1112 is nearly identical to another mining chip called SFARAD explains a skeptic on the forum. The two specs were also compared on the website Draftable for a side by side comparison revealing lots of similarities.”
Everyone be aware, though. Their website looks legitimate and professional, but they are not operating in a transparent manner. It appears they are merely leveraging a clever “grab quick cash by night” scheme.
Another elegant-looking hardware scam site goes by the name “Ufominers”. Their website says,
The main focus area of our company is the development of cryptohardware, creation of blockchain-based technologies and delivery of remote hardware access services.
Even though the alleged company talks a big game, several organizations have come out to question the legitimacy of Ufominers. Educational site 99coins pointed out a Ufominers deal that was too good to be true.
They said, “their most powerful product is the Nekrosminer that has a whooping 85TH/s for just $4,800 (~$57 for 1 TH/s). For comparison, the most advanced known miner on the market today supplies around 14 TH/s for around $2,000(~$142 for 1 TH/s). So you can see why their offer would seem very lucrative.”
These types of pricing and power discrepancy red flags are one of the most common indicators of a scam on the market. Anyone interested in purchasing a mining rig should acknowledge these deceptions. This pricing-to-power red flag is why Ufominers is likely another fraudulent company feigning legitimacy.
The Knc-Miner scam site is probably one of the most obvious scams to break into recent limelight. As mentioned, the “company” released a press article about the comeback of their business. Cryptocoins News has the press release headline as “KnC Miner Returns With Improved Mining Product for Sale!”
However, the miner suffers from the same power-price discrepancy that acts as a red flag for a scam. The Knc website claims their new Titan hardware has double the speed of the old one. This using only 1 of the original 5 boxes needed to achieve half that speed with the original Titan.
We have increased the speed to 750 MHs, offering our customers the fastest specialized scrypt mining hardware.
This is an obvious scam to those with a keen eye. The most powerful miner coming out on the market is an Antminer that mines at the speed of 375 mh/s, and the purported 750 mh/s is just not possible with current technology for commercial mining.
Knc Miner Quagmire, Organization Among Miners, and Staying Aware
Bitcoin.com also dug deeper into the Knc Miner scam quagmire and discovered the purported Swedish domain owner for the site has already turned it over to the police. The owner, Sten Oscarsson of Gogreenhost, runs Knc’s old data center after buying the bankruptcy estate, and tells Bitcoin.com he is calling for an organization among miners to help combat these types of scams within the ecosystem.
This, however, does not mean anything will happen to the “company.” It is now just widely understood the site is fake and based on the solicitation of fraudulent mining rigs. In this sense, all these similar scam sites are now being revealed as fakes.
Key Takeaway: Staying Vigilant of Scams
The key takeaway from this information is everyone understands there are an alarming number of scam sites cropping up. Each one purports to sell mining hardware that functions beyond current technological means at ridiculously low prices, and each intends on taking their customers money without providing a product in return.
Customers must remain vigilant and watch for these types of red flags. Make certain the company is reputable and that it actually exists. Protect the pocket book. Stay wary and vigilant of scams. The fraudsters, charlatans, and crooks are everywhere.
Do you know anyone who has been ripped off by a fraudulent mining hardware company? Tell us the story in the comments section below.
Images courtesy of Shutterstock, knc-Miner.com, and foxminers.com