As you are selling the units at a huge markup (350GH/s cost $7,000 or less and you are selling them between $52,000 and $35,000), you will pay old investors with new investors money in order to suck more money into your scheme until it collapses. There is no legitimate business that give investors a 500% return in one year, apart from PONZI SCHEMES -> that's what you are going to run.
Anybody believing otherwise is a fool.
Actually it almost certainly is NOT a ponzi.
Nowhere do they promise to pay out 500% - that's just the fairy-tale projection they make. They can pay out what they actually promise (output of X hashes) and still pocket a load of cash - no need to be paying from future investments.
Of course their projections are total bullshit - investors will be lucky if they ever even get back what they invested. But that doesn't actually make it a scam - as that's true of nearly all mining companies (just not to such a great extent). Where it probably IS a scam is because they give projections which are totally implausible - but try convincing Trading Standards of that if you make a complaint.
Ponzi - No.
Profitable - No.
Scam - Depends on how you define it. Of course they COULD just run and pay out nothing - but that makes little sense, at least until sales dry up.
Lying on the expected return is a scam in my book. As you said, those projections WON'T HAPPEN, and very likely their "investors" won't even get back the money they put in this venture. So, cloudhashing has two options:
1) run a one time, "hit-and-run" business, cashing in the huge mark-up they have on the hardware (1GH/s costs them aprox. $20 and they are selling it for $149, PLUS the commision of 10%), and screwing up the first investors that will very soon realize they are getting peanuts for their $. In this case new money will stop flowing in as soon as they start hashing and the clueless people who invested start spreading the word that they are receiving much less than they expected.
2) be very greedy and start making payments according to their fairy-tale projection using the huge mark-up they have on the machines, so people start spreading the word that this indeed is a business that gives you 500% return per year, and new investors pour in en masse.
1 or 2 it's not so different for me. From a legal point of view, probably 1) is not considered an outright scam, while 2) is a ponzi, so I agree that they will likely just go for 1). It may not be a *scam* from a legal point of view, but 1) is still a scam in my book, as they are sucking in money with
blatantly false assumptions, knowing their customers will probably lose their money, while they win A LOT in any case.