KnCMiner, who recently won a lawsuit against complainants who had sued over late or failed delivery of one of the company’s previous iterations of bitcoin mining hardware (the Titan) , has filed bankruptcy ahead of July’s mining reward halving.
The Swedish Bitcoin mining company’s CEO Sam Cole cited energy taxes and uncertainty about the future of the Bitcoin mining market over the weekend in an interview with Swedish website Breakit.se.
44 percent of our income goes to energy taxes. If we had had that the rest of this industry, so we had not gone bankrupt today. But we do not know if or when it will be changed.
While filing bankruptcy is being touted as a loss-cutting measure, the company will still be involved in its other ventures, including XBT Provider, a company that KnC owns in part which offers Bitcoin notes on the Swedish NASDAQ, similar to the American Bitcoin Investment Trust. Nonetheless, a total of 34 employees will be looking for jobs, according to the Swedish news site.
Despite many problems over the course of its history, KnC will be remembered as an innovative mining company, having only just last June released the 16 nanometer 3D FinFET Bitcoin mining chip, which enabled the company to maintain an edge on competitors around the world. This, too, was an effort to both reduce the company’s energy costs and to increase mining output. A press release from the time read:
The 3D design not only improves the speed of the processors, due to the shorter distances involved in shuffling around data down at this nanometer scale, but also dramatically increases energy efficiency. As the rate of Bitcoin inflation (production) is set in stone better efficiency means less energy consumed per minted (mined) bitcoin.
The primary reason for the closing is the upcoming reduction to just 12.5 bitcoins per block mined. Without a significant increase in Bitcoin price, and a high Swedish energy tax, the board of directors and the company’s investors are said to have made an executive decision to get out while it was still possible.
CEO Sam Cole told Breakit.se:
We knew there were risks of doing it here in Sweden. We were aiming towards the clouds, not on building a mediocre midsize businesses. We took the big investors and chances spirit. But it has not paid off.
The company has reportedly been winding down operations and laying off workers for months in preparation for the halving, but finally decided on Friday to announce it would be closing mining operations by July 10th.
The Bitcoin economy frequently sees companies come and go, and KnCMiner is not the only big fish in the mining game to have dropped out of the race. Earlier this month, rival Spoondoolies-Tech also announced it was ending operations. The vacuum in hardware production companies may be filled with new ventures, or the market may instead return to the realm of hobbyists instead of professional investors and “cloud-mining” companies, which have often been plagued by scandals such as that brought on by American firm GAW Miners.
Featured image from Shutterstock.
Last modified: August 10, 2020 11:49 PM UTC