- Editor Rating
- Rated 1 stars
- Really Bad
- Reviewed by:
- Published on:
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- Potential ReturnsEditor: 20%
- TransparencyEditor: 20%
- OriginalityEditor: 20%
- Follow-upEditor: 20%
Update January 3, 2015: LTCGear started to collapse shortly after this review was published and has already missed several weekly payments. As provided by the U.S. Securities and Exchange Commission, “difficulty receiving payments” is yet another “red flag” for a potential Ponzi scheme. It would seem that the owner is now stalling in order to receive as many as possible last-minute investments.
In order to avoid similar scams, investors should keep in mind that “high investment returns with little or no risk” as described in this review are a classic warning sign for Ponzi schemes. Genuine Cloud Mining is not risky business, hence a contract (which otherwise has little value) can never be accompanied by unrealistic (expected) returns.
LTCGear is a cloud mining company with a twist. Rather than renting out specific mining products, it sells its customers so-called qASIC shares. A single qASIC share represents the equivalent of 100 KH/s of computational power in the Litecoin network. Shares are bought for a one year period, which can be extended by paying a “maintenance fee” of about 5 to 20 percent of the initial price. Additionally, users get more shares roughly every one and a half months during the first year, in order to maintain a steady flow of income.
One product currently offered by LTCGear is 3000 qASIC shares for a price of $899 (300 LTC). 3000 shares represent the equivalent of 300 MH/s of computational power in the Litecoin network. By extrapolating the total network hashrate, it can easily be determined how many coins can be mined by this contract. Surprisingly, even in the scenario of a perfectly exponentially increasing hashrate the contract should earn itself back in just 55 days. The cumulative number of coins mined over time is shown below:
Regular share multiplications of 1.25 times the number of shares every one and a half month have been included in this graph. It can be seen that this indeed produces a steady flow of mining income. The only point where the line bends is when the Litecoin block rewards get reduced by half. If share multiplications are ignored, then the graph would look as follows:
Clearly, the outlook for this contract is very good, given that it is expected to return between 736 ($2,200) and 1,233 LTC ($4,000) in one years’ time. This corresponds to a potential profit of 146 or 344 percent on the initial investment, which is also shown in the graph.
Given the short time period in which the money is earned back, the annualized rate of return would be even higher if the payout is reinvested at similar rates. This would produce a ridiculously high rate of return of more than 3,000 percent on the initial investment per annum. For this reason, the offered product seems too good to be true. Any customer that invests at least $1,000 at LTCGear would potentially be a millionaire is less than two years’ time, while the company itself would only generate a little profit per contract at best. The only possible conclusion would therefore be that this is nothing but an ordinary scam.