Art By: Jing Jin

Cloud mining is risky business. Bitcoin mining in general can be risky business, but cloud mining in particular requires a lot of trust. Essentially, you are sending someone money on the promise that they will send you more money back. There is a lot of talk about hardware and cloud mining and state of the art facilities with giant server racks filled with powerful ASICs. At any given service, those things may or may not exist and few things can be done to make sure they exist.

Hashie.co, a cloud mining service that claims over 40,000 users, has suspended operations. Users have lost their hash tokens but users who purchased AMHash tokens through Hashie.co are able to move their tokens to AMHash. In a bizarre twist, someone has turned the site into an Alternate Reality Game (ARG) and the first few clues have already been solved.

Yes, let me repeat that for you: A site that sold virtual hashing power to mine a digital currency “in the cloud” has vanished with user funds and has replaced the service with an online ARG, and users are playing along.

Several days ago, users started complaining about missing payouts at Hashie.co. Hashie.co was already suspect in the minds of some users, because it didn't publish public Bitcoin addresses that proved the owners were actually mining any bitcoin.

Cloudmining is a market that appears to be tailor made for a Ponzi scheme. In Ponzi schemes, owners will take new investor money to pay back older investors. When the money gathered from the new investors outpaces the money put in from old investors, the Ponzi scheme is able to give the appearance of successful investment, when in reality it is being held afloat by incoming victims. The constant need for new victims makes maintaining Ponzi scheme impossible to sustain over the long term.

Cloudmining lends itself to this kind of scam, because investors are not always looking for quick high yield returns and there are few regulatory agencies in place. Hashie.co tempted users with unusually low prices and the promise of a free 10GH/s mining machine (but users would have to “buy” another machine before they could get payouts).

Hashie.co also sold mining contracts for a separate site, AMHash, which will honor the AMHash contracts purchased on Hashie.co. Hashie.co's own hashing contracts and its “FireHashers” are separate from AMHash and will not be carried over. At this point, it appears that anyone awaiting a payout from Hashie.co's “Gen 1” miners or “FireHasher” miners have lost their funds.

AMHash claims to be a seperate entity entirely from Hashie.co and also claims to not know who the owner of Hashie.co is. An announcement on Bitcoin talked described Hashie.co as an authorized reseller of AMHash.

Hashie.co user complaints started as early as late November but things really began picking up this weekend as more users complained of the site missing the payout date. By the December 27, the site's welcome page had been replaced with an MP3 playing the song Let it Go from the movie Frozen.

ARGs are games that typically exist within communities online. Players can be anyone who decides to participate in figuring out a series of puzzles until the announcement or reward is revealed. One of the earliest popular iterations of an ARG was videogame developer Bungie's “ilovebees” game used to hype the announcement of HALO 2.

The first puzzle in the Hashie.co game was solved by users finding a hidden Morse Code message in the song. That pointed to a URL which led to other clues that led to still more clues. Some users are hoping that figuring out the puzzle will convince the site to continue withdraws, while others are hoping for a promised 20 BTC prize; at least a few are playing out of pure curiosity. A message board and chatroom have been opened up for victims wanting to play the game.

Unconfirmed reports have the total amount of BTC missing from the site to be around 1481 BTC, according to a Bitcoin address that has been linked to several Hashie.co accounts.

The scammer, who may or may not be the owners of Hashie.co seem to be having fun with the victims. Inexplicably, the victims have fed into the scammer's ego by following the game obsessively.

But scammers aren't in the business of giving money back, even to those who feed their ego. The real game has already been played. Nearly 1500 BTC was at stake. The scammer won those and is now dancing on the 50-yard-line. It seems some of his victims have decided to dance with him.

Did you enjoy this post? You may also enjoy these: