What comes as a surprise to many in the Swedish startup scene might not come as a surprise to others in the Bitcoin industry. The Swedish Bitcoin mining company KnC Miner declared for bankruptcy this Friday evening.
At its peak, KnC Miner employed 50 full-time personnel working in the Clear Sky data center in Boden as administrators and engineers, and the rest working from the KnC headquarters in Stockholm.
What led to the bankruptcy is quiet clear if you look closely. The pressure coming from Chinese miners and the high energy taxes of Sweden that has yet to be reformed was a major factor. According to Sam Cole the CEO of KnC Miner there was no other way out then file for bankruptcy.
Apparently the above mentioned and the upcoming Bitcoin halving was too much for the mining giant to muster. A bankruptcy has been filed and involves the whole of KnC Group. The errand is now in the hands of the bankruptcy manager Nils Åberg who is leading the investigation whether or not the company is going to be sold off, or by any chance continue to operate.
Sam Cole the CEO of KnC Miner says in an interview with Breakit:
“44 percent of our income goes to energy taxes. If we would have had it like others in the industry we would not have to declare bankruptsy today. But we don’t know if and when that is going to change.”
In other Scandinavian countries, the tax is much lower. For example in Denmark, a data center pays around 0,5 öre ($0,00600795 USD) per kilowatt hour. While in Sweden data centers are paying 19,2 öre ($0,119804 USD) per kilowatt hour. A staggering difference, especially if your business is to mine Bitcoin.
In the same interview with Sam Cole & Breakit:
“But how does it feel for you as a founder & CEO?” – Breakit
“It feels like selling your own baby, it’s not a nice day. But it is the right decision.” – Sam Cole
“How has the investors reacted to the decision?” – Breakit
“They knew also that the risks whre high when they gave us the money, Creandum has been with us all the way, and we could, of course, have asked for me money. But enough is enough” – Sam Cole
Earlier this year KnC miner was forced to lay off 10 people to mitigate the situation with the ongoing Swedish energy tax reform.
At the same time Sam mentioned the pressure coming from Chinese Bitcoin Miners:
“Above else the competition is coming from China. Some players are investing 200-300 million dollars in mining equipment. That hit us hard.”
We will continue to cover the story closely, as yet not confirmation has been given on what will happen to the current customers and their mining contracts.