KnCMiner Ditches Customers in Favor of Mining Bitcoin and Litecoin for Themselves

October 22, 2014 03:13 UTC

KnCMiner is going to stop selling miners to “unhappy customers” and will instead focus on mining themselves. Hot on the heels of Magnus Daar Esq. of Nova, a law firm based in Sweden, stating that KnC’s actions might hurt Sweden’s reputation for other Swedish companies, KnC’s co-founder Sam Cole has admitted to closed and less-than-honest business dealings with former KnC customers. Here is his quote from his interview with Niclas Rolander of Bloomberg:

“When we don’t have these customers buy our hardware it becomes a different business model. It becomes much easier, much more open, much more honest,” Cole said in a phone interview. “There’s still going to be $2 billion, at today’s price, mined in the next few years. That’s a lot of cash that’s up for grabs, and we’re going to do our best to take a decent chunk of it.”

KnCMiner has decided to stop selling to individual miners entirely. Instead, KnCMiner will continue building up its datacenters in cheap-electricity regions of the world.

Also read: KnCMiner Super Jupiter Bitcoin ASICs Are Arriving In Pieces

KnCMiner’s Aspirations Should Be Checked

Many in the Bitcoin and Crytocurrency community that are already wearied by KnC’s lack of ethical business practices now have to deal with more of KnC’s actions against them. KnC now holds 3% to 4% of the Bitcoin hash rate. KnC’s goal of getting 20% or more of the total Bitcoin hash rate may or may not be achievable; however, KnC’s determination to do so is disturbing. The consolidation of hash rate that has been going on has been detrimental to everyone involved with mining. It has caused both large swings in variance as well as periods of concerning centralization in a decentralized digital currency. Ghash gained this state in June to the cry of the mining community and media calling for them to back off of their progression. Now with Ghash and Discus Fish controlling nearly 50% of the hash rate a simple collusion between them could damage the communities confidence in Bitcoin as it did when Ghash had 50%+ of the rate. A pool doesn’t even need to be at 50% to start implementing some selfish mining techniques that would be hard to detect. If KnC achieves its goal of 20% or more, the bitcoin hash rate will be further consolidated between 3 large entities; almost reminiscent of the three credit card companies that control 80%+ of all CC transactions. Do we really want to hand control of the blockchain to a company as duplicitous as KnC?

KnC is currently facing potential class action lawsuits in the US as well as in Sweden. KnC should have to address these issues first before accepting any more venture capital funding. KnC should also explain to its potential and current funders just how they got into their position to begin with. To the observer, it seems that KnC took preorder money and then failed to deliver in a timely manner all the while competing directly with their now-jettisoned customers by building a massive mining farm, with preorder money. A company that has done things like this is not one most people would want to invest in or be a part of, it makes you wonder just how much KnC has disclosed to their partners and potential partners.

Disclosure: The author does not own any KnC miners nor preorders with KnC.

Tell us what you think about KnC’s actions over the last year. Comment below!

Images from Shutterstock.

Last modified: October 23, 2014 20:38 UTC

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@TalonTech1

I am a disabled former Systems Admin, computer tech, business manager enjoying crytpo currencies. I am deeply involved in the mining ecosystem and physical coins, It fascinates me how it has brought people from all over the world together into a tight knit supportive community with commerce and tech.