KNC Miner Declares Bankruptcy – Chinese Competition Too Tough

[alyssa85]

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

Breakit has previously reported on the company’s difficulties with increasing competition from China. In February, the company laid off somewhere around ten full time employees, which constitutes a fifth of it’s total workforce, to cut costs.  The parent company, KNC Group, along with its seven subsidiaries has now decided to file for bankruptcy as a result of the changing marke

...The company raised $3 million (28 million SEK) i december last year but has apparently still been forced to shut down. The money was used to build a new server center. With the new center the company was able to make 80 quadrillion calculations per second. However, because of the declining price, the increased capacity would not result in any substantial increase in revenue.

[LiteCoinGuy]

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

[mindrust]

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.

[thejaytiesto]

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.

[alyssa85]

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...

[LiteCoinGuy]

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?

[Gyrsur]

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

could be that they were pulled over the barrel.

[Carlton Banks]

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

[alani123]

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.

[cjmoles]

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? 

[Quantus]

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.

[cjmoles]

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.

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.

[gentlemand]

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.

[Quantus]

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.

[DeathAngel]

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

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.

[sniveling]

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

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

[biggbox]

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.

[pawel7777]

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

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)

[unamis76]

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...

[alyssa85]

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

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 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.