In a press release issued late Friday evening Swedish time, the Swedish bitcoin company KNC Miner informs that it has officially filed for bankruptcy.
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 market.
“Due to high uncertainty regarding the bitcoin block halving that occurs in July, in combination with a continued rapid capacity expansion from our competitors, the company is very unlikely to be able to fulfil it’s obligations past July. The board therefore took the decision to take the company voluntarily into receivership”, CEO, Sam Cole says.
When Breakit reaches Sam Cole, he explains that the decision was driven by the bitcoin block reward halving, which means that the amount of bitcoin awarded for mining will be cut in half.
“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.”
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 bitcoin block reward halving, the increased capacity would not result in any substantial increase in revenue.
“The margins have gone from being really high to being much smaller, but we are not mining at a loss. We are cash flow positive, but we are investing a lot in growth”, Sam Cole said in January.
It now seems as if KNC’s own prognosis was too bullish, as the company is now in recievership.
Read more about this in our Swedish article.
Update: In a previous version we claimed that Sam Cole referred to a decline in bitcoin prices as a reason for the companies troubles. In reality he referred to the halving of the bitcoin block reward. We are deeply sorry for the mistake.