GBMiners Ponzi

Update: This post has been updated with a response from Amit Bhardwaj

GBMiners has made headlines in various media outlets lately due to the bitcoin mining pool accounting for roughly 3 percent of the network hashrate and supporting Bitcoin Unlimited; however, there is a connection between GBMiners and Gainbitcoin, which is a cloud mining operation that is clearly operating as nothing more than a Ponzi scheme.

The connection between GainBitcoin and GBMiners is Amit Bhardwaj, who is involved with both projects.

At this time, it’s unclear if the hashpower pointed at the GBMiners mining pool comes directly from Gainbitcoin, but Bhadwaj is known to be responsible for the vast majority of the mining pool’s hashrate.

Many bitcoin cloud mining schemes have turned out to be Ponzi schemes over the years, and GainBitcoin is no different. The combination of a cloud mining scam with a mining pool has drawn comparisons to Bitclub Network.

GainBitcoin Promises 10% Gains Per Month

Gainbitcoin guarantees a 10 percent return on investments into their cloud mining scheme per month. This 10 percent return per month rate has no basis in reality.

On the Gainbitcoin website, a 1.5TH/s mining contract is available for the price of one bitcoin. This means that the contract should earn buyers 0.1 bitcoins per month. According to the CoinWarz bitcoin mining calculator, 1.5 TH/s should earn less than 0.04 bitcoin per month.

Additionally, buying the same amount of hashpower from Genesis Mining, which is one of the few bitcoin cloud mining companies that hasn’t turned out to be a scam of some kind, costs $225—roughly a quarter of the price quoted by Gainbitcoin.

The investment claims made by Gainbitcoin are even more absurd when considering the fact that a cloud miner isn’t going to receive the full amount of income from their equipment without any expenditures. Gainbitcoin also heavily relies on a referral process. Bhardwaj mentions Gainbitcoin’s use of multi-level marketing in a video posted on YouTube.

There seems to be no logical reasoning behind the price of cloud mining contracts on Gainbitcoin. Prices for the contracts are denominated in bitcoin, and they haven’t changed at all since early 2016 even though the US dollar price of bitcoin essentially doubled over that period of time.

Returns on cloud mining contracts also don’t seem to have been affected by the halving event from the past summer either. Block rewards were halved, but cloud mining contracts purchased through Gainbitcoin continued paying the same rates.

Contracts that used to cost 100 bitcoin are now discounted to 86 bitcoin until March. This sort of discount has no basis in reality, and is often used by cloud mining Ponzi schemes to make sure money keeps flowing into the scam. A similar strategy was used by a cloud mining scam that was exposed in 2015.

Payouts for cloud mining contracts are sent out twice per month. If earnings are immediately reinvested into the cloud mining scheme, Gainbitcoin is basically claiming that 86 bitcoins can be turned into 309 bitcoins over the course of a year via the discounted offering.

There is a thread on bitcointalk.org where users have been investigating the claims made by GainBitcoin.

CoinJournal has not found any evidence that Gainbitcoin has missed any payments yet, although that tends to be the nature of Ponzi schemes at first. It’s unclear how much money has been put into the Ponzi scheme at this time.

Zebpay Warns Against Bitcoin Cloud Mining Scams

In a recent video posted on their Facebook page, Indian bitcoin exchange Zebpay warned their customers against the various cloud mining schemes that have become popular in India.

“We are aware that there are one or two alleged bitcoin mining schemes, which are extremely popular in India,” said Zebpay COO Sandeep Goenka. “These mining schemes assure a fixed return in bitcoin, and some of them promise returns as high as 10 percent of the bitcoin investment per month. We are absolutely sure that this is not possible in mining. We are sure that no mining scheme can guarantee a fixed mining return. We are sure that these are scams. We want to warn our users against investing in these mining schemes.”

“In absolutely clear words, we want to warn our users against investing in these bitcoin mining schemes which assure any kind of fixed return. In our opinion, these are scams,” Goenka reiterated.

Coinbank and Other Ventures

Gainbitcoin investors are also now forced to receive their payouts into a bitcoin wallet associated with Bhardwaj, known as Coinbank. When looking at the wallet’s layout, it’s clearly just a rebranded version of the open-source Bitpay wallet.

According to a post on Bhardwaj’s Linkedin page, Coinbank will soon offer a 1.5 percent monthly interest rate on fixed deposits. “We launched CoinBank, a Bitcoin Bank where you can do fixed deposits and we offer 1.5% per month interest rate on a 6 months fix deposit, which is the highest offered by a bitcoin wallet [or] bank globally,” wrote Bhardwaj.

A 1.5 percent monthly interest rate equates to a 20 percent return for investors per year when earnings are reinvested at the end of each month, which is another extraordinary claim—albeit not as amazing as the gains that are supposedly coming to Gainbitcoin investors.

GBMiners was built out of a partnership between Bhardwaj and Darwin Labs. In addition to GBMiners, Coinbank and something called the Bitcoin Growth Fund are also listed as technology partners on the Darwin Labs website.

Darwin Labs is also behind Satoshi Studios, which is said to be an incubator for blockchain startups in Southeast Asia. Amit Bhardwaj is listed as an investor on the incubator’s website alongside longtime bitcoin angel investor Roger Ver. Ver told CoinJournal that he has not yet committed any funds to Satoshi Studios.

CoinJournal has reached out to Darwin Labs CEO Sahil Baghla about the topics covered in this article. Baghla has decided not to comment.

Update: CoinJournal has received answers to questions sent to Bhardwaj. Bhardwaj’s answers have been edited for formatting purposes.

CoinJournal: Gainbitcoin’s prices are denominated in bitcoin. Why did the prices not change when the bitcoin price in US dollars roughly doubled in 2016?

Bhardwaj: Because the internal base price for Gainbitcoin is in BTC. Purchase and produce both are in BTC. So actual change in BTC price economics doesn’t impact the overall business.

CoinJournal: Why do your cloud mining contracts cost four times as much as the same amount of hashing power on Genesis Mining?

Bhardwaj: The price updates for contracts are done once in 6 months time frame. Gainbitcoin don’t use dynamic pricing structure as even the output for users is not dynamic. Genesis Mining is genuine as per your take, but I can surely find a lot of disgruntled customers because of wrongful information passed to them In all practical sense generic customer doesn’t have enough information to choose the right mining contract. In case of Gainbitcoin, it’s users are included in the ecosystem with a positive response and not left on their own judgement; leading to better inclusion in the ecosystem.

CoinJournal: Why does the mining calculator on Gainbitcoin project 0.1 btc earned per month for 1.5 th/sec when a normal mining calculator says 1.5 th/sec should provide 0.04 btc per month?

Bhardwaj: Bitcoin mining calculators are good for people who want to run their own mining setup, and I assure you not good for cloud mining chaps. Whenever we get a chance to interact one to one I’ll personally explain u the maths behind Gainbitcoin successful pattern for the user gains. It’s very simple, only cloud mining people makes it too complex.

From CoinJournal’s perspective, saying things like the price of bitcoin does not impact a bitcoin mining business only confirms the fraudulent nature of the business.

  • Ankit Goyal

    Hey Kyle, Thanks for reporting this with so much clarity. I’m from India and this article just reinforces what I already knew about these guys. I’ve also been to one of their bitcoin ‘seminars’. Its all stories they talk about. No hard numbers.

    • ViNayak

      Hye, Kyle is not meet Mr. Amit. I request him to meet Mr. Amit then write artical

      • sudhakarhannda

        Hi Vinayak, I am trying to meet with one of Amits close associates at Poona – so far he has only assured saying that now Amit has tied-up with Chinese govt for more Server farms. I am only hoping that all this is not a Ponzi Plan !!
        God Bless us all……………

  • Ankit Goyal
    • Jay Gupta

      Hi ankit!!! Even i was approached by one of the investor in gainbitcoin. I read many articles regarding bitcoin cloud mining ponzi schemes and was convinced that gainbitcoin is running a ponzi scheme. I dont have technical knowledge in relation to genesis and hashpower and stuff…. I belong to commerce background and have sound knowledge of how things work in real world unlike half educated businessman attending seminars.
      If you have questions for amit bhardwaj and the answers for the same will confirm the the speculation (gainbitcoin=ponzi scheme) we’ve been making which will help us expose this ponzi scheme… please revert to me…. my friends have connection with technical team of gainbitcoin.

      • sudhakarhannda

        Hi Jay Gupta,
        There have been such Ponzi schemes and this could be one. At the seminars I have attended, they just dont have time for related questions. I am meeting with one of the leaders at Poona on a one-to-one basis…..and will get back.
        If you like call me on 9823062777

        • sudhakarhannda

          Jay, do get back on what happened with meeting with technical team of gainbitcoin?
          Its all about how do they pay a 10% return every month????

          • Sardeep Singh

            It’s not 10% ROI , But it is 10% including principal+incentive by gainbitcoin. Please correct yourself.

        • kenneth Miller

          also if you meet one on one ask them if they can start paying us in bitcoin like our contract was agreed upon instead of mcap coins. the least they could do is pay us in etherium or dash if they can’t pay us in bitcoin. why the unknown mcap that we can only sell for half the value they count it for and only has about 3 places you can send it to?

      • Ria Agarwal

        Hello Jay
        I am an investor in GBC. I have only received payout once since I joined in Jan 2017. I have written to Amit and his team, raised ticket with technical support, called as many GBC “upliners” as I could find. None has so far confirmed a payout of 10% as promised by GBC, You can get in touch with me rachita.agrwal@gmail.com

        • kenneth Miller

          they change the rules about once a month. so whatever rule they had a month ago won’t get you a withdraw this month. if you follow the new rules you will get paid more often. rite now the new rule is you have to have coinbank on your phone and you have to have a mcap address for them to pay you in mcap coins as a bitcoin substitute. the only bad thing is they are basing the mcap coin price from a site that values them at 5 dollars each. you can not withdraw from that site so you have to get a c-cex account and then you can sell your mcap coins for about 2 dollars each at c-cex. so if they owe you 100 dollars worth of bitcoins you will get paid about 40 dollars worth of mcap coins. but in your contract you will lose 100 dollars in promised earnings. yep i guess they are scammers.

    • J T

      Kyle doesn’t understand the difference between price and value, and so his ignorance is blocking him from understanding what you are saying.

  • Rohit Gupta

    if gbminers isnt actually mining bitcoins, it can be termed as ponzi scheme, but how much its mining on daily basis can be checked on the http://www.blockchain.info which is a public ledger.
    I find it funny that people in companies like zebpay and unocoin are calling gbminers or gainbitcoin a ponzi scheme.
    Bitcoins arnt regularized yet in India, they should think about their own business model and check whether its legal to charge such a high rate to buy bitcoins in INR. zebpay offers bitcoins on their app, which is so much higher than the dollar rate.
    Its a new market and companies are competing in the eco system.
    My suggestion to readers, dont read blogs and articles by people who don’t have any idea about the technology, to pass a judgement is easy. And journalists mostly like to sensationalize all info.

  • Angelo Guiseppe

    What een BS…. a writer without knowledge, this is what i call internet polution

  • ജിമ്രുട്ടൻ പി പി

    I lost 6 BTC to him. This guy is a pakka fraud!!!

  • Otto Bloom

    Come on man! You should have asked him why he says 10 percent earning, interest he promises but people dont receive any payment, even not 5 percent or 1 percent. No withdrawel. He just keeps people waiting withdrawel coming in a week, in 2 days etc. but withdrawel never comes. In the mean time Gainbitcoin scammees scam more people while investers are just given hope they would receive money. Invester just wait, wait, wait..

  • rurerapa

    OK, but why are you linking to a site that offers a “nothing more than ponzi scheme”?
    You don’t understand much about computer security and theory of mind, do you?

    I made the mistake of clicking that without checking, assuming it was another article or something but instead, I went to a site that for all I know was going to try and install something on my computer…
    For all I know, they could’ve found a way to do it silently.

    That is, if you’re even telling the truth.

  • looking good
  • looking good

    Arrest GBMiners Founder AMIT BHARDWAJ and make him compensate those he has SCAMMED!

  • info darwinlabs

    Darwin Labs was associated with GBMiners only as a software vendor. The moment it got to know about GBMiners’ fraudulent practices, it detached itself completely from that organisation. Darwin Labs now has no association with GBMiners whatsoever now. Kindly read this link (http://www.prnewswire.co.in/news-releases/darwin-labs-officially-ends-relationship-with-gbminers-618313913.html ).