Bitcoin Forum

http://swedishstartupspace.com/2016/05/27/knc-miner-declares-bankruptcy-chinese-competition-too-tough/

if you cant mine profitable at 400-500 USD per coin, you should go out of business.

You just can't compete with Chinese when it comes to "cutting off expenses". Every goddamn thing is the cheapest in China, including manpower. Once someone invents a new technology, you can get it for free the next day in China.

“We knew that there were risks related to doing this in Sweden. We aimed for the skies, not to build a mediocre medium sized business. We got big investors on board and took a chance. But it hasn’t paid off.”

Here is their mistake.

Yeah, they are masters in making everything as cheap as possible, that is why chances are if you look at something it will say "made in china" or "manufactured in china". Of course, this has negative impacts in the long term, look at all those deaths by elevators that malfunction happening in china for example.

But not only this, it turns out electricity is very cheap in china, so this is perfect to run Bitcoin mining business.

This does mean that all bitcoin mining is now done in China. That is a risk, especially with their authoritarian govt that is trying to stop capital fleeing the country...

Source?

guess the real reason is the access to chip produktion for reasonable prices.

could be that they were pulled over the barrel.

salient point, the chinese do have a near monopoly on chip fabrication for hire. It's difficult to imagine who KnC were using if not a China based fabricator

Not unexpected IMO. Those people knew what they were getting into when they created this startup. Nobody really expects a long term career in a business like bitcoin mining, which by design isn't destined to last for long. Competition just makes things worse in western countries where the jib market has pushed wages so high compared to Asia.

True-True.  And there will be more to come very soon.  There are interesting times ahead for sure.  But, is it a problem that has no remedy, or a problem that requires the community to be more proactive? 

They are still making money but they can't raise enough money to continue expansion and in the Bitcoin mining world if your not constantly reinvesting in new hardware then your old hardware quickly becomes obsolete.
 
China is economically speaking in high gear, If it were a car engine flames would be shooting out the tail pipe. The question here is how long can China continue to heavily subsidize all these industries, specifically power and chip manufacturing. My dad thinks their economy will equalize over the next 15 to 30 years with the rest of the world and will (the USA) be bitching about India or someone else as they take over for a short time.

I disagree with my father, China has outlawed the exodus of wealth and outlawed foreign companies from operating inside of China; to me this is the perfect yen to the yang of a world currency, they are saying to the world "fine the world reserve currency can be denominated in US dollars as long as we hold all the wealth."  And what we get is a rich America and a wealthy China.

If China keeps doing what its doing no amount of tariffs or a trade war will stop them. This is the model and America must try to emulate it. Even if that means the end to a world currency.

India....!  For sure....it is a sleeping giant in the literal since.  It always amazed me when I would walk into my Engineering courses and feel like a minority.  An amazing number of East Indians are entering the field of engineering....The contrast in the demographics between my CSCI coursework, my EE coursework, and my girlfriends liberal arts coursework was something to ponder.  India is getting ready to start moving soon.  So, I think you're old man has an astute understanding of things to come.

I never really bothered to investigate them in detail. What was their setup?

The Chinese just get on with shit by the sounds of it. Westerners noodle around creating cool brochures and drowning in health and safety.

If China keeps doing what its doing no amount of tariffs or trade wars will stop them. China is the new model of growth and America must try to emulate it. Even if that means the end to a world currency denominated in US dollars.

Agree in some way. Electricity can be very cheap in parts of China, they obviously have lots of financial issues if they can't continue to turn a profit in this climate.

KNC Miner should have focused on getting a cheap supply of electricity. Geothermal sounds cheap and I assumed Iceland was the world's top producer until I checked on Wikipedia. It says the USA produces the most, and Iceland's in seventh place. China is at the bottom of the list, so geothermal might be a weak spot for its miners.

United States
Philippines
Indonesia
Mexico
New Zealand
Italy
Iceland

https://en.wikipedia.org/wiki/Geothermal_electricity

lol. Everything is cheap in China - raw materials, manpower, electricity is free in some areas. To add on, it has a huge population with very good engineering minds. They could design, reverse engineer and improve hardware faster than others.

It doesn't really matter whether geothermal energy is cheaper to produce. Unless miners are capable of building their own geothermal plants, what really matters is how much the suppliers charge the end-users. And those costs are still lower in China.

Off course there are number of other factors (regulations, taxes, cost of labour, cold/warm climate etc)

This was to be expected... After they started to delay miner deliveries and fooling clients they were bound to be bankrupt or even to become the next BFL. I guess they gave a step too big for their legs and thought they could outrun everyone. That's what you get...

KNC were based in Sweden not China. I think electricity is expensive in Sweden - they are trying to go fossil free, but that raises the bills.

I was thinking that it was already the case, since they didn't released a new product for a long time. That's sad, and that's another less competitor against China :/...

and there are alot more states in the world where mining is cheap like in georgia.

China owns over 90% from mining and over 97% from BTC trades :)


http://bitcoincharts.com/charts/volumepie/

https://bitcoinity.org/markets/list


Also, the USD market almost doesn't count. it's only 5%  ;D

electricity is not the big spender... its the cost of production of rigs..

in short.
for every $1000 bitmain sells to western countries. it can make 5 units atleast.
so for every unit a customer buys, bitmain get to keep 4, for free..

bitmain is not really wasting funds on buildings or employing electricians to install fnky new generators during 2015-2016.. as that was all paid for in earlier years..so their costs were low

but in KNC's case they got $15m in february 2015 wasted a couple mill decking the place out and then designing a new chip ready for summer 2015..
by this time summer 2015 came they were highly negative in their investment.. where as bitmain at that same summertime last year was in profit.

then KNC not only had to break even. not only had to make more to cover ongoing costs. but also to put money back into the investors accounts(which were due for returns now (hense the bankruptcy)).. and thats before they could even develop a successful business plan to get an extra 10% ontop of all of that, just to stay ahead of difficulty..

so now u know the crux of the story.
KNC could not build a unit of 4.7gh for $200
they didnt have the community trust to sell units 5x above cost due to issues in previous years still lingering over their heads.

they didnt have the business acumen to manage their build costs. they literally tried to rush it and waste money before they could even really get their new mining farm operational, and then try rushing even further just to try getting back in the race..

KNC was claiming that they are using green energy. I don't know the specific, but it most likely was hydroelectric power plant.
So I am almost sure that electricity cost was not the major problem for them - most likely it was cost of labor in Sweden that hurt them.

http://www.kncminer.com/ (http://www.kncminer.com/)

Green energy costs MORE!  The cheap energy in China is the VERY not green burn shitloads of black coal and give all your neighbors cancer.  The reason mining is cheap in China is because nobody really cares if we pour shit-tons of cancerous causing materials into the sky.  The Chinese environment is like a toilet.  Chinese miners don't care about this.  If you are going to take care of the environment, you are going to have to spend some money.  That is how China wins.

So what? There were shirt makers, shoe makers in every country in the world a few decades ago, but now most of that stuff is coming from China. That's not the end, though, as some clothes factories have closed in China, with new ones opening in Vietnam and Bangladesh. Maybe miners will follow the same path.

Yeah, the Bengali fabs are still having a pretty tough time getting their 14nm process running well.  I don't see mining going in that direction soon.

feel sad for a whil when think if some exchange use that miners and its make exchange stopped to mine bitcoin,for its not give any effect,i'm not a miner,so everything happen with knc miners,i dont see its serious problem.

already are, but shhh lets not talk about iceland just yet.. its a secret

It is a farce...they are getting out of mining because they have a knc exchange now that they used to fund from mining...they can now let the big IPO $$ and investors in their
mining operations hold the bag ..as they moved on..this exchange is going gang busters from what I understand....

that exchange/endeavor was set up completely separate from kncminer as a business (funny that huh?) and I guess they are just killing it with this exchange or whatever on NASDAQ

same dance knc has done in the past

made home miners and swore would not have a data hall....in the 4 months from delivery in Sept 2013 to Jan 2014 said yeah we are gonna have a data hall

took pre-order money on neptune (btc miner) used the $$$ to fill out their data hall first and then 4 months late shipped neputunes as a result neptunes maybe got 1/3 of Roi

took big newbie IPO $$$ (same game as home miners with folk and bigger pockets) ...for cloud mining (went no place)and the big data halls with their 14nm chip they

did not release to the public

then like all knc endeavors...just when you would expect as a consumer to get more from them ...like a normal company (consumers another wave of equip) or the IPO investors (who saw the 14nm chips JUST deployed in April maybe and would expect to get again a NORMAL return on investment) er nope....

KNC pulls the plug out on all this..and has moved on to other endeavors leaving the above holding the bag.... see the exchange on NASDAQ below....SOME IPO money but mostly
in house from what I understand

http://www.kncminer.com/blog/newsarchive (http://www.kncminer.com/blog/newsarchive)



So by declaring bankruptcy 'early' they leave the data hall IPO folk and etc holding the bag....they sell it say to a concern for 1/2 the price because they get 1/2 the coin after halving and walk again win/win/win....and from what I understand KNC always mined daily BTC to cash...so they bled this puppy like the cash cow it was as long as they could....I doubt the IPO investors were told this year that (from the article) $480 btc price was NOT enough to keep the mining operation going heh.....:(

http://www.coindesk.com/kncminer-declares-bankruptcy-cites-upcoming-bitcoin-subsidy-halving/ (http://www.coindesk.com/kncminer-declares-bankruptcy-cites-upcoming-bitcoin-subsidy-halving/)

Also notice in the article how they say they want to wrap this bankruptcy up NOW before halving ...lol so obvious others are gonna bag hold this loss in IPO $$$...

evil works (tm knc)


Then again Sam Cole WAS (is now again) a Banker...so they are like a 'medicine show' you go that was great...give them money and blamo they are out of town on to the next gig :)


So anyway ......they are NOT gonna suffer at all in any of this.....the majority of all the money in the failed endeavors above were consumers or IPO $$$ and now they have a fully funded exchange..they control in full ..making $$$ hand over fist with 'limited' IPO money to retain control.....

evil geniuses they are imho :(

China can compete everywhere - everything is cheap over there, so they can do everything and others can just look and do nothing.  ;)

Ur kidding they folded and the Chinese celebrated with a massive price pump

Seems they have a profitable subsidiary that is unaffected by the bankruptcy

and will absorb core staff "XBT Provider"

Clever businesses always try to diversify so that it won't be affected by the sudden changes in a specific field. I guess they are closing the mining part and moving to other businesses.

Geothermal electricity is used in my country but electricity here is not cheap it's too expensive that people are stealing electricity by connecting directly to the main switch without the use of a meter.

Chinese miners maybe using cheap electricity and that's it or maybe they run their own power like a run off river type of electricity. Using solar is not advisable.

Exactly how does a company go bankrupt after manufacturing their own equipment; garnering VC funding and pre-selling miners delivered after used for a spell; enjoy relatively cheap electricity; locates its mining farm in a cold climate so not to contend with heat issues, consuming even less electricity than their competition due to lower cooler cost?

I'm curious to learnt if any VCs got burnt.

VC: How's everything goin' this month?
KNC: Okey-dokey!
VC: How's everything goin' this month?
KNC: Okey-dokey!
VC: How's everything goin' this month?
KNC: Okey-dokey!
VC: How's everything goin' this month? Hello. Hello! HELLO!
KNC: HeHeHe! Bankrupt!
VC: Boy, we didn't see that a comin'!

yeah just who are they bankrupt from

just getting rid of staff the easy way

They were expecting much higher prices per coin than they were, but its kind of funny that as soon as they declare bankruptcy , price went up.
i know its probably just a coincidance, but it sure does seam funny in a way. i bet they wouldnt mind if the price was 520-550 usd before they went under.

The Chinese will always stay a bit ahead of the crowd... they have chip manufacturing plants in their country and they have subsidized / cheap electricity.. on tap. Other countries have to import these miners

and this comes at a cost. Most of the time these technologies are already outdated and old by the time it is shipped.  ??? If other governments wants to help Bitcoin miners, they should provide subsidy in the

form of cheap electricity and duty free import duties for these asic chips. {which will never happen} 

I think after the halving we will see alot more mining going out of business, which is probably not a good thing for decentralisation. 

I'm just gonna leave this here - https://bitcointalk.org/index.php?topic=1454507.0 - while wondering when KnC filed for bankruptcy.

I'll leave this here as well: https://blockchain.info/address/1Mpce11eUTuP9mxyDixdFbJzPrdNEJkgB4

Are you saying kfc are using okcoin (chinese exchange) to launder transfer their money from Sweden to China, maybe set up a new mining operation over there? Truly living the phrase "if you can't beat 'em, join 'em?" :D

Well at one time in the past on knc forums they did say (knc) they were selling 'bulk chips' to china...so the connections probably exist.....

anyone remember this from back in the day chime in

This is what I hate about the Chinese. They always try to eradicate the competition and to monopolize certain sectors. Look at the steel sector. The Chinese steel mills are dumping hundreds of thousand of tons of steel, at extremely low prices. Not that these mills are profiting out of it. Their main aim is to ruin the other steel producers. The same is happening in the Bitcoin mining sector.

you got it the other way round.. they may be a swedish company. but they are giving FUNDS to china.. not chips.
in short they are BUYING chips from china

Hmm...maybe you are correct....but I thought that some of the chips knc had 'were' used in china miners however the arrangement

thus the connection (again others chime in...this is what I think I remember) though come to think of it that may have just been 'hoopla'

told by KNC to build them up in the press/btc world etc...they may have been in 'talks' for such..but perhaps nothing came of it but a press release

(again if I remember correctly)


edit: Yeah it seems it was 'bulk chip' sales of 28nm chips (Jupiter's etc) as to if any 'real' significant amount went to China I remember..not sure if they really sold any..just saying I thought
they had sold a mess of them...thus the China connection via this and of course as quoted above also had their 28nm chips made in china (I assume)

http://www.financemagnates.com/cryptocurrency/news/kncminer-offers-individual-jupiter-chips-for-sale/ (http://www.financemagnates.com/cryptocurrency/news/kncminer-offers-individual-jupiter-chips-for-sale/)

Anyway imho they have their 'farm' already setup to buy...probably from someone in China....with the bankruptcy...anyway would not surprise me
if they have all their ducks in a row on this..and/or their 'exchange' they are keeping (NASDAQ) would not have a piece of this pie in some manner either

(KNC: Evil it is what we do...and we do it well!) (tm knc)

The CEO of KNC has given an interview in swedish:

http://digital.di.se/artikel/knc-miner-grundaren-kina-har-fordelar-som-vi-inte-kanner-till

And there is this choice comment in it:

the sand wouldn't have cost them that much neither would the labour,

and if the electricity is properly sourced ahead of time in bulk supply

it to will be very cheap, their sale of mining units would have paid for

their own equipment, also exchange market cap is much higher than

the BTC price which is 8 Billion unleveraged,

I don't understand why they needed 50 employees. Couldn't they have automated most of the processes?

Also, from this which talks to some investors (translated, but you get the idea)
http://digital.di.se/artikel/knc-agaren-vi-hade-inte-koll-pa-produkten

Plus: Couldn't they just sell equipment instead of playing the miner game?

Yes, this exactly it is called predatory dumping and it is aimed to destroy every competition and dominate the market.
Normally after your competition is eliminated you rise the prices of your services and become a monopolist.
But what exactly that means for bitcoin as a currency? I guess not much will change. Because China already dominated the market.

BTC is different than steel though - as a market... it seems BTC demand is very high in China. So their net effect in terms of dumping and buying may be more towards the buy side. The supply would always be constant anyway.

KNC are "calculating" based on the swedish price of rigs..

China make rigs FAR FAR cheaper. the amount china invested in their own farms is very low.
as i said on a few topics now.. for every consumer sold rig china sold, they got to keep atleast 5 themselves..

so lets do some maths.

lets pretend it cost sweden $500 a rig.. sold for $1000.
$500 would go back into producing 1000 to refil stock.. and the other $500 would go towards paying other bills like the new equipment and ficilities

however in china are a year+ ahead and already had their premises paid off a year before.

so china makes a unit for $200 and sold for $1000
$200 went back in to make another unit to sell for retail(stock). .. $600 went to make 3 rigs for themselves and $200 went to pay bills.

now imagine it this way..
sweden invests $500k to make 1000 units.. gets $1m.. pays bills and left with $500k to make 1000 units ($0 profit)
china invests $200k to make 1000 units.. gets $1m.. pays bills and left with $200k to make 1000 units for retail and $600k to make 3000 units for themselves

now imagine china.. has 2 profitable choices..
1000 stock can turn into 4,000 stock.. no personal use
4000 stock can turn into 12,000 stock.... no personal use
12,000 stock can turn into 48,000 stock.... no personal use
48,000 stock can turn into 192,000 stock.... no personal use
or
1000 stock can turn into 1000 stock 3000 personal use
1000 stock can turn into 1000 stock 6000 personal use
1000 stock can turn into 1000 stock 9000 personal use
1000 stock can turn into 1000 stock 12000 personal use

now imagine sweden
1000 stock turns into 1000 stock. no personal use, no profit
1000 stock turns into 1000 stock. no personal use, no profit
1000 stock turns into 1000 stock. no personal use, no profit
1000 stock turns into 1000 stock. no personal use, no profit