KnCMiner leaving bitcoin hardware sales business, seeks $50 million, wants 20 percent of mining market

KnCMiner won’t be selling mining hardware to consumers as the days of mining out of your garage come to a

KnCMiner won’t be selling mining hardware to consumers as the days of mining out of your garage come to a close. Instead, Bloomberg reports, the company is looking to take as much as a 20 percent slice of the bitcoin mining pie, worth $2 billion over the next few years based on today’s prices.

KnC’s transformation of its business model to major data center operations comes at the right time. KnC, like many of its industry peers, has been a subject of considerable customer dissatisfaction. Instead of selling hardware to consumers, they are now marketing mining contracts off their large operations, which leverage economies of scale to reduce costs. Said co-founder Sam Cole:

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“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. 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.”

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Despite the drop in bitcoin prices, Cole says that his mining costs are “significantly below $400” per unit. He added that if the company was publicly traded, which it may be one day, its share price would be impacted by changes to the bitcoin price- similar to how resource prices impact publicly traded shares of the companies who mine them.

Of note, the article states a view by KnC that customers were dissatisfied because of the drop in prices, effectively implying that they have no real claim against KnC. Many commenters have countered that this is not their claim at all; rather, they allege, KnC has failed to deliver on orders altogether, or at least in a timely fashion. When customers do receive their equipment, it is outdated and prices may have dropped significantly, rendering their operations unprofitable. There have also been allegations of KnC mining with customer-purchased equipment, which upon delivery, is far from perfect condition. The allegations are similar to those levied against Butterfly Labs by the FTC.

The company is looking to expand its operations in Sweden and Iceland, seeking $50 million to build new data centers and mining equipment.

The company has also diversified away from hardware sales through its launch of a wallet offering.

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