Is Black Arrow the new Butterfly Labs? It’s been seven months since pre-orders were placed. The list of complaints growing, their customer support diminishing, and 4 months after the promised shipping dates, products are still not shipped. It certainly begins to look like it.
In September 2013, an eCoin forum user asked if Black Arrow is a scam. Back then, there certainly was no reason to believe so. They had successfully build and shipped Lancelot miners. They were now building custom ASIC miners that were fast, reliable and more power efficient than their competitors. Their offered products seemed like a good deal. Not unrealistically good, just good. In a forum announcement, their Prospero X-1 and X-3 miners matched excited Bitcoin miners.
Forum posts were answered quickly and the website looks user-friendly with an extensive knowledge base, a physical address in China and ways to contact support through Skype, a forum and support tickets. But support tickets haven’t been answered for months. They are unreachable by Skype, and have gone all but quiet on the forums.
Buyers of their mining equipment have been more verbally active. The posts on Black Arrow’s eCoinTalk forum shows consumer sentiment regressing from excited, to worried, to angry, to disappointed.
It is now July, and some of the pre-order shipments from November have not yet been completed. By all standards, that is a serious delay.
As much as we’re used to them in the real world, a delay in the fast moving Bitcoin world is critical. Within months, the difficulty of Bitcoin mining will double. Warren Meyer has a great example showing how a Bitcoin miner that should earn you $25,000 a month in bitcoins on pre-order date, will only earn you $2300 a month by the time it is ready for shipment. Three months later, it’s a tenth of that. This is the reason customers are so angry. They fear their expensive 2000Ghash/second miner rig is close to worthless by the time it gets delivered.
Buyers of equipment generally know this, and make a calculation of purchase costs and electricity costs to estimate the return on investment (ROI): the time it would take to earn back their investment in the mining hardware. As the tradeblock mining calculator shows, difficulty is increasing exponentially. In that respect, a seven-month delay in delivery is simply not acceptable.
So is Black Arrow a scam? No, the story probably goes more like any startup that faces manufacturing challenges. Black Arrow is a small Bitcoin mining manufacturer that produces their own hardware. This requires extensive costs in R&D, money such a small company doesn’t have. That’s why Bitcoin hardware manufacturers generally turn to pre-orders. Pre-ordering gives a small company the needed capital to develop ASIC devices. In return, the “investor” is rewarded with a front place in line when the device finally ships. Black Arrow additionally offers a 25% discount on the price.
Problems arrived with a delay in production. LCD units did not arrive on time, and more production difficulties surfaced that the company is not really specific about. As of today, the product webpages for the Prospero X-1 and Prospero X-3 mention they are still “manufacturing this item, it will not be shipped immediately”.
As a result, Black arrow had to fund their ongoing R&D and production efforts with pre-order money, basically eating their customers investments. A necessary evil, to continue operations. A Black Arrow representative (david105396) transparently posted the following on the eCoinTalk forum on 5 march 2014:
We are not able to refund everyone that has requested this at the moment. Because of the compensation plan for batch 1 customers, and the discount given on the orders we have tight budget for the first productions. If we would refund all request immediately this would interfere with the production and we can’t put the other customers at a disadvantage. The refunds will have to wait until more orders have been placed and more funds are available. We hope you understand our situation. Sincerely, The Black Arrow Team.
Comments on this post were mostly uncertain and angry, but also supportive. Transparency and honesty are highly appreciated in the Bitcoin world. Three months later, little of that sympathy is left.
It remains to be seen what will happen to production, shipping and refunds. Following the history and communication efforts, the intentions of the company seem legit, but reputation issues deeply problematic, not unlike Butterfly Labs.
On 6 July Minersource, the official distributor for Black Arrow equipment, stated that it has started shipping the Prospero X-1 miners. It expects to clear the queue by the end of July. If you are a customer of Black Arrow and you have received your hardware, do give a post in the comments.
Disclaimer: I have no affiliation with any mining company and don’t have mining equipment. I own 5 bitcoins.
Last modified (UTC): August 12, 2014 8:49 PM