CCN Reveals: Timeline of KncMiner’s Struggle With the 20nm ASIC Bitcoin Miners
Who is KNC Miner?
KNC Miner is a Swedish ASIC mining device manufacturer who manufactures both Bitcoin and Scrypt ASIC devices and is owned and operated by Andreas Kennemar, Marcus Erlandsson,Michael Unnebäck, and Sam Cole. KNC started out by taking pre-orders for Mercury, Saturn, and Jupiter mining ASICs which shipped as the first profitable Bitcoin ASIC devices on the market. KnC blew BFL out of the water as BFL was mining on customer hardware andshipping their customers unprofitable hardware about a year later.
November 26th, 2013, KnC opened pre-orders on their website for Neptunes. After being the first company to produce profitable ASIC devices for Bitcoin, people were thrilled to buy from them. Little did they know what would happen with their purchases and what their money would buy for KnC’s company. Neptune was slated to be 2 TH/s on that date, but around December 3rd they boosted their device’s speed somehow. It was from there on to be at least 3 TH/s. KnC announced Neptune as a 20nm ASIC device when all of their other devices used 28nm. KnC wanted to be the first to create a 20nm chip, even if that meant taking over half a year to deliver their products to the customers. They constantly marketed the fact that it’s low power per hash and the first 20nm chip. Customers had to wait over half a year for their devices that make less than $2,000 a month all so KnC could brag about their chip size.
February 4th, 2014, KnC announced that they were building, in their own words, “one of the world’s largest data centers.” They stated that they were building it as part of the “Plan B” for the customer’s benefit in case they fell behind in shipping. They had scheduled batch 1 for Q1/Q2 (Quarter 1 or Quarter 2) 2014 shipment and batch 2 for Q2 shipment to leave, “about one month after the first batch.” That means that KnC needed to ship all batch 1 Neptune device by around May 31st 2014 and at least one batch 2 Neptune by June 30th, 2014. In an effort to stay competitive, the prices have been dropping from $12,995 down to $9,995, and now $5,995 for batch 3 which is slated for shipment by the end of Q3. KNC also had what the community is calling, “batch 0,” which was a brief period where previous customers of KnC could buy a pre-order Neptune at a reduced price, which lasted from November 26th until November 29th of 2013.
April 8th, 2014, KnC realized that they might not be shipping on time, and they provide alternative options to their Neptune customers. They were working on developing cutting edge 20nm chips (slow process) in a fast moving market. The options they provided were the “Plan B,” also known as “hash while you wait,” convert your order to a 3TH/s Jupiter (a “Super Jupiter” as the community calls them), convert your order to a Titan and be refunded any difference in price, tough it out and receive a free extra Neptune, or receive a full refund.
Customers were allowed only to choose one of those options and batch 3 customers never had these options. The “Plan B” option was a sham and customers only got hosted for a few dayswhile they lost their free miner for choosing that option. People who converted to a 3TH/s Jupiter received broken and used equipment that presumably came from failing data center hardware with their old chips replaced with the 3 TH/s chips. As for the last three, I opted to receive a Titan upgrade with the difference refunded to me. KnC processed my refund promptly, and I had my roughly $3,000 refunded to me within days. I’ll keep you updated on how the rest plays out. Those who opted to “tough it out” will receive their second Neptune with the batch 3 shipments if all goes well. As for people receiving full refunds, there’s been a bunch of people who have waited months for a refund.
April 22nd, 2014, KnC started shipping 3 TH/s Jupiters. (This date came from a news article which stated they would start shipping the Tuesday after Easter.)
April 24th, 2014, an article on NewsBTC.com shows the completed KnC data center hashing away. KnC had previously stated that the data center was for customer use if KNC had not been able to fulfill their shipping obligations. Was the data center operational only for testing purposes? Kurt, a KnC representative who’s highly active on the KNC forums, states indirectly in a comment dated June 17th, that KnC’s data center is, in fact, hashing away for KnC’s profits.
[…] We do not possess 25% of the network. Our data centre is nowhere close to this figure.
Customers were given “Plan B” hosting for only a few days in June, so why was the data center hashing at such a high percentage of the network? You can also see on Blockchain.info that KnC possesses 5% of the total Bitcoin network hash. KnC states on their FAQ page that they will never hash with more than 5% of the amount of hash that they sell to customers.
“Why are you selling the Miners and don’t mine yourself (will you use the miners for mining yourself)?
We are mining ourselves, but we believe in the Bitcoin project, and a diversified market is the best for all parties. We will continue to mine, but we do not believe in a monopoly of miners. We will not mine with more than 5% of the hash rate we sell, and we will never mine with customer hardware.”
With owning 5% of the network hash, we don’t even need to calculate how much hash they’ve sold to customers, as they own 5% of the total Bitcoin network hash! That includes other ASIC manufacturer’s devices as well. Oh, and let’s not forget the fact that KnC sold used 3TH/s Jupiters. Where do you think they got those used devices?
If you’re curious about just how much hashing power 5% of the network is, let’s do the math.BitcoinCharts.com reports the network hash rate at press time as being 129,643.76 TH/s. KnC owns 5% of that. (6,482,188 GH/s) I plug those numbers into my Bitcoin calculator, and it shows KnC’s happy face. KnC is pulling in an estimated profit of almost $3.6 million each month from their data center alone. That’s a lot of hooch!
April 28th, 2014, KnC announced that their 3 TH/s Jupiters arrived broken. The fiasco was so bad that Caleb Chen, one of our editors, did a writeup exclusively on that issue. His article describes so much detail about the situation that I can’t accurately describe how bad it was without reprinting his whole article. Rubber bands holding heat-sinks down? Really KnC? I recommend reading his articles and seeing the included pictures of this mess. At least KnC was professional enough to ship replacement units for free to everyone who ordered a 3 TH/s Jupiter from them. Caleb Chen, in his article, writes:
The entire KnCMiner Super Jupiter ordeal was concocted to help KnCMiner save face in light of missing their Neptune deadline; however, with this latest turn of events, KnCMiner should probably count the entire publicity stunt as a failure.
June 17th, 2014, KnC announced that they would be shipping their batch 1 pre-order (apparently inclusive of the pseudo-batch 0 devices), and they would be shipping batch 2 devices before the end of the month. That goes against what KnC promised its customers in that it would put about a month of time between batch 1 and batch 2.
One could argue what the word “about” even means, but I’ll take it to the extreme and say that “about,” in this case, means 51% of something. 51% of the 30-day month of June is 15.3 days. The June 17th post states that they would be shipping that week. Even if they had shipped batch 1 units that same day, they would be 1.7 days past the limit of saying batch 2 will ship “about” one month after batch 1, especially while stating that they plan to ship batch 2 before the end of the month as well. Customers have spoken out about the brief amount of time between batch 1 and batch 2 Neptune shipping.
June 30th, 2014, KnC announced that they had run out of wafers for their 20nm Neptune chips. Could KnC have used the chips for upgrading units in their own private data center?
The Fine Print
Aside from the above timeline of what customers had to go through, KnC has made some changes in their fine print without announcing it. KNC started out with a 12-month limited warranty period and offered refunds for all of their products. On December 30th, 2013, KnC was still offering a 12-month limited warranty. Their hidden Terms and Conditions page (not listed in the header, footer, or product pages) now states that they offer a 3-month limited warranty.In a post dated June 17th, 2014, Kurt states:
In regards to the change in warranty, we have found that the majority of ASIC boards that are sent back for replacement to our RMA department have been overclocked and pushed way past its safe limit, we do not believe this to be fair. The warranty has been decreased to deter this from happening. Our upcoming ASIC boards will be much sturdier than our previous models since we have much more experience in ASIC development this time around. Thus, 12 month’s warranty will not be needed. Our technical team are also available to assist you with any issues that may arise during and after this period.
Some companies who offer different types of overclocking hardware, such as PC motherboards, limit their warranty by stating that overclocking voids your warranty. For some reason, KnC doesn’t work their warranty this way, but instead they decreased their warranty period.
Another sad thing to see go is a possible refund. KnC states clearly in all of their product pages that they do not offer refunds on their units. Kurt states that this is because pre-order money is used to fund the company’s research and development. (R&D)
Thirdly, we have been transparent and stated that due to the relatively young nature of scrypt mining, we would not be offering any refunds on the Titan miner, each customer had been made aware of this at the time they made their purchase. It is also clearly written that no refunds will be offered with the Neptune 3rd batch. We understand that this may not appeal to everyone, but no one is being forced to accept this. We design ground-breaking, cutting edge products to keep mining competitive, this takes a lot of hard work and funding for R&D, customers not truly committed to the purchase can affect the development of the product.
1.2 The Products are sold for business use only, and Purchaser hereby accepts that it has purchased the Products in order to conduct business.
Put another way, KnC arbitrarily defines all customers as businesses. Therefore, they feel they do not have to respect Swedish law and the Consumer Protection Act and can choose to ignore any requests for refunds. Even if they ship products that are unsafe and/or don’t work.
Be aware of the loophole they’ve built into their Terms and Conditions… they use it as an excuse to steal (how else would you describe $13,200 for something that doesn’t work and they refuse to refund).
Kurt defended KnC by posting the following.
Hi, Our support team are trying to work with you to replace any items that are broken. It is impossible for us to issue you with an RMA for any affected parts if you are not willing to cooperate. No refunds will be offered; we will ship any items that are defective back to us at our cost and give you a replacement. The turnaround for the RMA procedure is extremely fast and in most cases new parts will be sent out the same day we receive your broken items.
My take on this is that most of the mess ups are over with because a lot of the above revolved around one thing, 20nm chips. The fact that the technology is so new made it so that KnC spent over half a year with their research and development of the Neptunes. They’ve learned from their mistakes and their new Titan and Mini Titans both will be using their original 28nm technology. Mercury, Saturn, and the original Jupiter devices all used 28nm technology and shipped faster.
KnC is trying to keep up morale by selling the promised ASIC cards and controllers for the old Jupiters, Saturns, and Mercury units. KnC’s data center got a lot of negative attention, but there is nothing to suggest yet that they will be adding Scrypt mining devices to that data center or any future data centers, but the thought is not far from critics’ minds.
KnC has a nasty habit of removing forum posts that hurt their reputation. If you find a dead link above, this may or may not be the reason for this. I try to make sure that every link I add to my articles can be viewed by the general public without any trouble.
Photo Credit: Wikimedia Commons and Shutterstock.