I lost $15,000 in a Bitcoin mining scam

During the height of the last bull run in cryptocurrencies in 2017, I became attracted to a Bitcoin mining company that was paying my friends thousands of dollars every month. One person talked about buying a fabulous home in Phoenix in a few months. He had already retired his spouse from her job.

Another friend was averaging thousands of dollars as well.

They were living the fabulous life.

Naturally, all of the earnings were in Bitcoin which could be exchanged for dollars.

I watched what was going on with this group and was intrigued.

Whenever I checked my Facebook feed, I saw photos, positive statements, comments, and other people involved in this.

After a few weeks, I messaged my friend to send me some details on this money-making activity.

Granted I was only learning about cryptocurrencies at this time. So the learning curve was huge.

Bitcoin had just hit a new record at $19,140.

Google trends were going crazy with Bitcoin as a top searched item.

I did my best to read whatever I could online and picked up a book on cryptocurrencies while I watched hours and hours of videos on YouTube.

There was a lot of information and people creating new accounts on social media with something related to cryptocurrencies in their username. Three years later a lot of these accounts are no longer active. Anything when it comes to investing lasts more than a few weeks. You need to be focused on your investment for years at a time and always learning while adapting when the market is down.

I was still hesitant about this group so I bought the smallest package available. I spent $500 on a small Bitcoin miner.

The mine was located in a facility in Phoenix, Arizona so I didn’t have to worry about setting up the mine or the electricity costs that came with it. Friends I know who have their own mine, they keep their miners in a separate room. The miner makes a lot of noise and they also need their own cooling system since they can get very hot.

Image by Лечение Наркомании from Pixabay

After the first month with my mine, I was seeing Bitcoin hit my account daily. The percentages were small. It was about a few dollars a day. The amount always differed.

The amount of Bitcoin ranged from a dollar up to four dollars a day. This wasn’t a lot but investing in Bitcoin is a long term process. At least it was for me.

When I invest, I always think about the taxes.

I wanted to pay the least amount possible.

Bitcoin was categorized under similar tax rules as stocks. So holding on to Bitcoin for less than a year was considered a short term trade. Any Bitcoin held on for longer than a year was considered a long term trade.

So I was determined to keep as much of my money as possible.

The next month or so with my mining contract was going great. I was seeing Bitcoin hit my account daily.

This gave me the urge to buy additional Bitcoin mines.

I decided to buy 3 mines for $5000 each. It was expensive but I thought well worth it.

This was more money from my retirement account.

After I had a certain amount, I took the Bitcoin off the platform since I wanted to own it rather than the company in case something happens.

I was looking for a wallet to buy. A wallet in cryptocurrency terminology meant a place to store your cryptocurrencies. You can think of it as a bank where you keep your money.

There were a few wallets available at the time.

You could store your Bitcoin on an online wallet which is not always the best. Someone could hack the website and take your Bitcoin along with other users.

The other option was an offline wallet or hardware wallet.

With these wallets, you can compare them to a thumb drive you use on a computer.

These are something only you have access and control.

At the time the two most popular were a Ledger Nano or Trezor wallet.

I finally decided to buy a Ledger Nano.

I’m not sure why I picked this one over the Trezor wallet. Maybe it was the name or I heard more people talk about the Ledger Nano.

Several months had gone by and I was still earning Bitcoin in my account.

At the same time, the price of Bitcoin was dropping hundreds to thousands at a time.

The cryptocurrency bull run was definitely over.

Then I started to read the news that many Bitcoin mining companies were feeling the strain with the sudden price drop.

These companies reported losing money and some were going out of business.

I was worried.

People in my group were worried.

We were having weekly Zoom calls on how things were going.

A few times, the moderator and other top leaders assured us things were fine.

With the price drop, we were informed our daily pay would have to change as well.

What we received before for Bitcoin earnings would be lowered to keep the mining company operational.

I was fine with that.

Nothing lasts forever.

I was still earning Bitcoin every day.

A few times, the company was allowing visitors to check out the facility.

Since it was in Phoenix, I didn’t get a chance to see it in person.

Some people made videos of the tours to the site as well as pictures of the mines.

The price of Bitcoin continued to fall even lower. The price was down below $10,000 per Bitcoin.

This caused a lot more stress on the company.

Their operations eventually shut down and the Bitcoin stopped hitting my account.

We were told we would get refunded some of the Bitcoin but that never happened.

A lawsuit was filled by a Phoenix law firm.

I provided all of the documents and images I had.

After receiving an update after update from the law firm, I finally received a letter stating they could do nothing to help me.

I was pissed.

I was out $15,000 of my initial investment.

Fortunately, this was the money I had in a retirement account. So it was money I technically wasn’t missing.

This was some money I had invested in an old retirement account I no longer contribute to.

It was tough losing this money but I learned a few things from this.

  1. This mining company was an MLM or multilevel marketing company. So the person who brought me in received a couple of hundred dollar bonus. I have worked in other MLMs and this one really left a bad taste in my mouth. You may be familiar with a Mary Kay or Herbal life company to get a general idea of what this company is based on. I am not saying either of these companies are bad but giving you an example.
  2. Anyone who offers me to join a cryptocurrency MLM, it’s an immediate no thank you. I really didn’t want a part of any cryptocurrency MLM. Cryptocurrencies were still unregulated and if something were to happen again, I might as well consider it lost money. There are many cryptocurrency MLMs out there so be aware.
  3. Since I lost a good amount of money, I decided to really focus on my cryptocurrency investing. I didn’t think cryptocurrencies were going anywhere and there was still a lot of money to be made. I was determined to make what I lost in cryptocurrencies. So I continue to invest in cryptocurrencies.

Hopefully, this provides you some lessons and what to be aware of in this wild wild west of the cryptocurrency world.

It is fun to make money but not always fun to lose money.

Check out my other articles on cryptocurrency:

How I plan to make millions in cryptocurrency

How to make your millions in the cryptocurrency market

What is Bitcoin?

To protect the identities of some people identified in this article, their identities were altered for their privacy.

There are some affiliate links in this article. I will make a commission if you decide to make a purchase. You will not be charged any extra if you decide to make a purchase.

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