The FIL mining machine scam I experienced, how to squeeze the wealth of countless people!
Once hailed as the 'blockchain revolution', the value of FIL has evaporated by over 99%, turning the wealth of countless investors into bubbles during this frenzy.
In the spring of 2021, the hottest topic in the crypto world was not Bitcoin, but FIL. At that time, the price soared to $237, with a market value exceeding $30 billion, and the entire circle was shouting, 'FIL is the Web3 storage revolution, about to disrupt AWS and Google Cloud.'
As a senior crypto analyst, I received countless calls from clients every day, urging me to 'hurry up and get on board, or you'll miss this wave.' But after in-depth research, I found that this seemingly perfect project hid huge risks, and ultimately chose to stay away.
01 The Rise and Fall: The Roller Coaster Journey of FIL Coin
The story of FIL Coin begins with a grand vision. Founded by Juan Benet, a graduate of Stanford's Computer Science Department, Filecoin aims to be the incentive layer for the InterPlanetary File System (IPFS), transforming global data storage with blockchain technology.
This concept is very appealing: a decentralized internet storage ecosystem built by idle hard drives worldwide. In 2017, Filecoin raised $257 million through an ICO, setting a record in the industry at the time.
Four years later, this project, once filled with high hopes, is a dismal sight. By 2025, the price of FIL has dropped to around $2.3, plummeting over 99% from its peak, with its market capitalization evaporating from $30 billion to about $1.6 billion.
This collapse did not happen suddenly, but rather is a slow crash that had long been predictable.
02 Four Fatal Flaws That Destine FIL to Fail
After deeply researching FIL's economic model and technical architecture, I found several fatal flaws that cannot be ignored.
First is the 'death spiral' of the economic model. The total supply of FIL tokens is 2 billion, of which 70% rewards miners, with about 200,000 to 280,000 newly added FIL daily, an annual inflation rate close to 15%, while the daily destruction amount is only about 1% of the newly added amount.
This design causes the market to be continuously diluted by inflation, forming a vicious cycle of 'the more it falls, the more it is sold; the more it is sold, the more it falls.' Miners need to sell FIL to pay operating costs, and the falling prices force them to sell more tokens, further suppressing prices.
Secondly, the false prosperity of the storage ecosystem. The total storage capacity of the Filecoin network is about 23 EiB (equivalent to about 2 billion HD movies), but the real paid data is less than 5%. The vast majority of miners use 'invalid data' to brush rewards, appearing prosperous but actually hollow.
Thirdly, the technical experience is far behind centralized solutions. Users can transfer a 1GB file in nearly milliseconds on AWS, while on Filecoin it takes half a day due to the complex 'sealing computation' process required before storage.
Fourth is the heavy regulatory crackdown. On September 24, 2021, China completely banned virtual currency mining, and projects like FIL, which rely on physical mining machines, lost their foundation almost overnight. More than 70% of FIL's computing power nodes were forced to relocate, leading to computing power loss, soaring costs, and declining returns, making it difficult for small and medium miners to survive.
03 Mining Machine Scams Exposed: Shocking Lessons from Blood and Tears
The biggest victims of FIL mining are those investors who have invested heavily in purchasing mining machines.
I have surveyed more than a dozen FIL mining machine manufacturers in Singapore, Shenzhen, Shanghai, and Beijing, and discovered a shocking phenomenon: when I asked about professional technical details and economic model questions, most salespeople couldn't answer, only emphasizing 'the sooner you mine, the sooner you earn money.'
These mining machine companies are essentially well-designed financial schemes. Investors need to first buy FIL and then stake the FIL to the project party, receiving returns through mining. The problem is that those whose first batch of sealed contracts expire are reluctant to reinvest their staked funds after earning dividends, resulting in insufficient new funds, which directly leads to a continuous decline in the coin price.
The leading miner 'Time-Space Cloud' collapsed in May 2022, and the owner was taken away for investigation for suspected fraud and organizing and leading pyramid schemes. Prior to this, major miners such as the Interstellar Alliance and Renren Mining Farm also successively went offline, marking the complete departure of domestic FIL mining from the historical stage.
What is even more outrageous is that a scam gang developed the 'Star Power' APP platform, using investments in FIL mining machines as bait, even rewarding BMW cars for recruiting downlines. Eventually, they shut down the platform and absconded with the funds, causing investors to lose over 9.7 million yuan.
04 The Real Future of Distributed Storage Lies Not in the Coin Circle but in Practical Applications
Some may ask: Is distributed storage itself a false proposition? On the contrary, the distributed storage market is indeed growing rapidly.
Reports show that the market size of China's distributed storage industry grew from 7.58 billion yuan in 2021 to 13.79 billion yuan in 2023, with a compound annual growth rate of 34.88%. It is estimated that by 2025, the market size will reach 23.65 billion yuan.
But the true path of development for distributed storage is completely different from FIL's vision. Actual applications are more similar to large data centers like Alibaba, Tencent, and Baidu in the remote mountains of Guizhou, which are the real solutions that meet market demand.
Currently, distributed storage is widely used in finance, education, the internet, and healthcare, with the financial sector accounting for the highest proportion at 16.8%. These applications do not rely on token incentives but are based on real business needs.
Filecoin's competitors have also found more pragmatic development paths. Arweave proposed a 'one-time payment for permanent storage' model and has succeeded in the NFT and on-chain archiving fields; Storj is compatible with the AWS S3 interface, which is favored by enterprise users.
05 Pitfall Guide: How to Identify the Next 'FIL'
Based on my in-depth analysis of the FIL project, I summarized several key indicators to identify similar traps:
First, pay attention to whether the economic model is sustainable. Projects with high inflation and lack of effective destruction mechanisms are very likely to fall into a death spiral. All models that rely on 'later funds to support earlier ones' will ultimately collapse.
Secondly, verify whether there is real demand. If 95% of a project's activity is just wash trading rather than real usage, then its prosperity is destined to be short-lived. True technology should solve real problems, not just create speculative opportunities.
Third, assess whether the technical experience has advantages. If decentralized solutions are slower, more expensive, and more complex than centralized solutions, it is difficult for them to survive in market competition.
Finally, consider the project's risk resistance capability, including various factors such as policy changes, technological iterations, and market competition. FIL's weak performance in the face of China's ban on mining warns us that any project must have the ability to cope with regulatory changes.
The next 2-5 years will be crucial for whether distributed storage can be successfully commercialized. But it is certain that truly successful solutions are likely not based on token incentive models, but rather, like traditional businesses, starting from actual commercial needs to gradually build a sustainable business model.
As one industry expert said, Filecoin is not a zero-value coin now, but it is also not a get-rich-quick coin. It is a project in a state of 'marginal rebirth' that needs to achieve real commercial landing to be reborn.
If you have invested in FIL or similar projects, feel free to share your experiences; your story may help more people avoid pitfalls. Click to follow me@加密崎哥 #美国非农数据超预期 $BTC $ETH
