What it built
KnCMiner AB was a chip company that happened to mine. Its own site described it as founded in 2013, based in Stockholm, designing application-specific chips and running "industrial computing centers on renewable green hydropower". The machines were named after planets: Jupiter in 2013, Neptune in 2014, then a platform called Solar in 2015. The company claimed to have been "the first in the world to deliver 28nm and 20nm Bitcoin chip technology", and put its data centres inside the Arctic Circle, where the cold is free and the hydroelectricity is local.
It sold those machines to the public first and mined with them later. That order of business is the source of everything that went wrong. Buyers paid before manufacture, and a chip generation that slips by a quarter is worth a fraction of what it was, because network difficulty does not wait. The Titan, a 2014 product aimed at mining currencies other than bitcoin, shipped late and worked poorly, and customers sued.
On the record
One of what CoinDesk described as up to three publicly known legal efforts against the company was decided on 29 April 2016, in case T 14917-14, brought on behalf of eleven buyers. The court held that people who buy mining machines are buying them to make money and are therefore businesses rather than consumers, which removed the consumer protections the claim was built on, and ordered the plaintiffs to pay KnC's costs of 772,000 Swedish kronor. The company's chief executive Sam Cole said KnC had won on all counts.
A month later the group filed for bankruptcy at the District Court of Stockholm on 27 May 2016. Cole put the reason as the block subsidy halving due that July: "Effectively our cost of coin, how much we produce the coins for, will be over the market price." He said the board acted before the money ran out rather than after, and denied any connection to the litigation. The KnCGroup companies were placed under receiver Nils Åberg, who said his first priority was "to ensure we can continue business [to] at least 10th July acquire the operations as a going concern, including the company's very knowledgeable and diligent staff". XBT Provider, the exchange traded note issuer part-owned by the group, was outside the receivership and was sold on.
Swedish coverage at the time reported the future of the Boden data halls as uncertain. What is not uncertain is the lesson the industry took from the case: selling next year's chip to a stranger today puts the manufacturer's schedule risk on the buyer, and the buyer has no way to price it.