Coinmine Offering 6.5% Interest for Users Who Keep Funds in Their Wallet, but There Is a Catch

November 15, 2019 / by Crypto.IQ

Coinmine is a company that produces easy to use mining rigs that are essentially plug and play, making it foolproof for people to mine who do not know how to mine and do not have the time to learn. However, Coinmine has caught flak because it would take decades to break even, assuming that technology does not continue to advance, which is a bad assumption. Therefore, Coinmine users need the crypto market to go up a ton in order to ever profit, and they need to HODL until that happens, which is probably why the Coinmine website front page has a profit calculator with a default setting of $20,000 per Bitcoin (BTC). 

In order to improve the profitability situation, Coinmine is now offering interest for users who keep their mining revenue in their Coinmine wallets, starting at 6.5% per year. There are a few caveats though. 

First off, users cannot make any withdraws from their wallet in a month or they will not receive interest for that month, creating the agitating situation where users are penalized for touching their coins. Also, the interest rate can change without warning. 

The worst caveat is that the funds in Coinmine wallets are not backed by FDIC or SIPC, nor any other insurance, and therefore if the wallets are hacked there is no recourse for users. 

It is also unclear how Coinmine is obtaining the money to pay interest. Apparently Coinmine does take a 5% cut from all mining revenue, similar to a pool fee but larger than normal, so perhaps the interest can be paid from that alone assuming a fraction of users do not participate in the interest program. 

However, the terms and conditions do not state if the coins are left alone in the wallets, making it possible that coins are used by Coinmine for investment purposes. CryptoIQ carefully reviewed the CoinMine website and could not find any information as to whether users have sole control of private keys, and as to whether coins in the Coinmine wallets are used for investment purposes. 

CryptoIQ reached out to Coinmine, and they indicated that Coinmine has access to user funds and that coins could possibly be used for investments. Coinmine claims that the company is well-capitalized and will not utilize users’ coins for collateral, at least in the beginning. 

Just like with any other investment program, users should do careful research before participating.