Chinese Bitcoin Mining Alliance Denounces Ponzi Schemes in Transparency Push

A consortium of major bitcoin mining companies has pledged to be more transparent in its operations, specifically on the source of cloud mining payouts.

Including major China-based bitcoin mining firms ASICMiner, Gridseed, Rockminer, XBTec and ZeusMiner, the group boasts that the partnership has resulted in the “the strongest alliance ever in cloud mining history”, according to the official announcement.

The move follows previous cooperative efforts between the companies, which are moving to provide greater support to one another in the face of increasing international competition. Last month, the companies involved in the new alliance – with the exception of Gridseed – pledged greater cooperation in the increasingly competitive mining product marketplace.

In the statement, members of the group promised to keep customers informed about both the source of their hashing power and how the coins that are paid out to miners are generated. In the later case, the companies resolved to be more transparent about whether such coins originate from mining blocks or other forms of income.

The group wrote:

“We, the alliance, have taken an oath to become more and more transparent in future, opening up to the public and our customers to show everyone that we have actual honest hashing power behind our cloud hashing.”

The companies also called on other firms in the cloud mining space to join them in their transparency bid.

While not specifically naming any other companies, the announcement states that the group believes there are mining entities on the market that “pretend to mine coins but run Ponzi schemes” or may be operating in violation of securities regulations.

Need for honesty

According to the announcement, those involved intend to take steps to improve transparency efforts in a bid to assuage fears that the cloud mining business model represents a high risk to potential investors.

Such concerns have been voiced by a number of prominent figures in the digital currency space who have questioned the integrity – and solvency – of cloud mining providers.

The announcement explained:

“In the course of the next weeks, we will deliver proof that our cloud hashing is based on actual mining. Only by being transparent and honest we will build a sustainable future for all of us. We owe this to everyone in the cloud mining community.”

Rockminer representative Alex Lam told CoinDesk that he believes it is important for companies in the industry to acknowledge the issues that can arise from a lack of transparency. Citing what he called a broad shift shift from home-based mining to hosted solutions, Lam argued that ultimately, the effort is to get more people supporting digital currencies.

“We will never stop promoting mining to people,” he said.

Business meeting and Forbidden City images via Shutterstock