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Bitmain Allegedly Sold ASIC Miners Caked With Dust

Last Updated March 4, 2021 5:08 PM
Joseph Young
Last Updated March 4, 2021 5:08 PM

Zooko Wilcox, the founder and CEO of Zerocoin Electric Coin Company, a company that develops privacy-focused cryptocurrency Zcash, has revealed that Chinese miners have alleged that Bitmain, the world’s biggest cryptocurrency mining equipment manufacturer, of potentially distributing hardware caked with dust, suggesting prior use.

“Someone privately sent me these allegations (in Chinese) that Bitmain sold some miners as new that arrived caked with dust, along with Bitmain’s response. The communication gap between the West and China makes it hard to disentangle,” said Wilcox.

Cake Dusted Miners

One group of miners claimed on QQ, one of China’s most widely utilized social media platforms, that the recently distributed B3 Miner of Bitmain have “seriously inadequate” computing power that are unable to mine cryptocurrencies at a similar rate as previous batches.

The group also released a photograph of a B3 Miner filled with dust as shown below, suggesting that the mining equipment were used before, prior to distributing them to clients.


In response, the Bitmain team explained that it has verified with its internal department on several occasions and found that 100 ASIC miners had minor issues. Bitmain emphasized that the issue was minor given that it ships 10,000 units per batch and only 1 percent of the distributed mining equipment were impacted.

“Among the right defenders, some are refunded and after an investigation, it was revealed that some are still underpowered and some are repaired. Some media outlets claimed that a few hundred people have received mining equipment that are poorly functioning. This is not the case,” said Bitmain in a statement loosely translated from Chinese.

The Bitmain team added that it is not possible to manufacture every ASIC miner perfectly and some minor errors could emerge along the way. The company emphasized that miners who receive imperfect equipment will always be compensated and it has already compensated miners who received underperforming B3 Miners recently.

“Any product can be imperfect, and there will be shortcomings in the process of enterprise development. We have also compensated the miners who have received mining equipment with inadequate computing power and the mining equipment are now being run properly. We are not offering empty cheques. There must be a process. For miners with insufficient power, there are relevant compensation policies. We have been negotiating this compensation policy,” the company said.

Miner Compensation From Bitmain

Bitmain is a multi-billion dollar conglomerate with a valuation estimated at around $5 to $10 billion. It also has established a large-scale investment firm targeting tokens, blockchain projects, ICOs, and cryptocurrency businesses.

Most recently, Bitmain led a $110 million round to back Circle, a US-based cryptocurrency and blockchain company, to assist the firm in launching its own stablecoin.

Bitmain founder Jihan Wu said in an interview that the company envisions a future with private central banks, without the dominance of government-backed institutions.

“It’s a very important enabler for a private central bank. Currencies can do good or bad things, so we need a certain framework to limit money laundering risks. If we have an open platform we can limit the potential negative things,” Wu said.

Bitmain has evolved into a major cryptocurrency conglomerate with branches and subsidiaries within it, so the company will likely not risk its reputation to save tens of thousands of dollars and refrain from compensating miners.

The firm has clarified that it intends to fully compensate miners if additional problems emerge in the future and it will work with its internal departments to improve its compensation policy.

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