KnCMiner layoffs — May 27, 2016

KnCMiner Cuts 100% of Workforce in Bankruptcy Filing on May 27, 2016

Sweden-based bitcoin mining firm KnCMiner declared bankruptcy on May 27, 2016, according to CoinDesk. The company did not disclose a specific number of jobs cut, but the filing affected 100% of its workforce as the business entered receivership.

KnCMiner’s parent company said the bankruptcy was a pre-emptive move by the board of directors ahead of the Bitcoin block reward halving, which was expected to reduce miners’ revenue by half in mid-July 2016. CEO Sam Cole said the company’s mining costs would exceed the market price of bitcoin after the halving. “Effectively our cost of coin – how much we produce the coins for – will be over the market price,” Cole told CoinDesk. “The price is now [roughly] $480. With all of our overhead, after July, the cost will be over $480. All of the liabilities we’ll have after that time will be too high.”

The company said the bankruptcy was not related to recent litigation involving its mining hardware customers. Earlier in the month, a Swedish court ruled in KnCMiner’s favor in a lawsuit tied to the Titan, a hardware product designed to mine alternative cryptocurrencies. Cole denied any connection between that case and the bankruptcy filing.

KnCMiner was founded in 2013 and had raised $32 million in venture funding from investors including Accel and Creandum. The company had been one of the industry’s fastest-growing mining firms and had faced criticism in the past over its consumer-oriented mining products. Following the bankruptcy decision, KnC said it would seek to sell profitable parts of the company, though it did not specify which assets would be auctioned. Cole also said the company had already reduced overhead in recent months, including layoffs at its mining facilities.

Sources: CoinDesk