Originally Posted by rowan

Some early (and maybe current) cloud mining operations were simply a variation on a ponzi scheme, with no actual hardware or mining involved. Client pays in USD, operation buys BTC with that USD, pays client in BTC.

It all falls apart when the value of BTC rockets and they can no longer have sufficient USD input to purchase their BTC output.

Would be interesting to trace payments from these operations to see if they come from virgin blocks, as you would expect if the coin was mined.