The U.S. Security and Exchange Commission (SEC) has put a stop to a Kodak-branded cryptocurrency mining scheme including a Kodak KashMiner device, the company confirmed on July 16, 2018.
The KashMiner “Scam”
Spotlite USA, the company behind the product, first put the bitcoin mining computer named Kodak KashMiner on display at the Kodak booth at the Consumer Electronics Show (CES) in Las Vegas in January 2018. The company advertised the machine as a device dedicated to mining the cryptocurrency.
As you may or may not know by now, a person mines cryptocurrency by using their computer to solve complicated mathematical algorithms. The purpose is to verify crypto transactions and earn or “mine” a cryptocurrency in return.
However, critics called the KashMiner technology a “scam,” arguing it will never be profitable.
Moreover, the U.S. Security and Exchange Commission (SEC) has put a stop to the machine’s development and sale. According to Kodak, the company never officially licensed the program:
“While you saw units at CES from our licensee Spotlite, the KashMiner is not a Kodak brand licensed product. Units were not installed at our headquarters.”
The SEC terminated the program even before the KashMiner website went online, with placeholder text boxes still occupying the places where the content was to be.
The Quixotic Expectations
The idea behind the Kodak KashMiner was that you could rent one for two years for only $3,400, paid up front. The fee supposedly covered the equipment cost, an air freight export license, export customs clearance, U.S. customs clearance, and U.S. customs duties. The company said customers get to keep a part of the profits mined, and promised earnings of around $375 per month, which would mean a total gain of about $5,600.
The plan also included installing hundreds of devices at the Kodak headquarters in Rochester, NY, because of the cheap electricity provided by an on-site power plant.
The problem was, however, that mining bitcoin has become increasingly more difficult, and whoever ordered the machine wouldn’t see any profit but rather a loss of their investment.
This is what the critics were pointing out the entire time, labeling the advertised profits as unachievable and misleading.
For the machine to be profitable, an average price of bitcoin during the two-year period would have to stay around $28,000. Unfortunately, the bitcoin price has plunged, reaching less than $7,000 today.
Halston Mikail, Spotlite USA CEO, said that the company would continue its mining operations privately with equipment installed in Iceland, rather than renting capacity out.
The Rise of Bitcoin Mining Machines
The advertisements for crypto mining machines, the so-called mining rigs, are at an all-time high. One can find names such as Bitmain Antminer S9, Dragonmint 16T, Avalon 6, ranging in prices from $400 to $3,000.
Miners increasingly use these specialized devices, called ASICs (Application Specific Integrated Circuits), to facilitate bitcoin mining, since it’s now virtually impossible to mine profitably using a typical computer.
Bitcoin’s creator, the mysterious Satoshi Nakamoto, intended that bitcoin miners perform their work on CPUs (computers and laptops), but they soon realized they could get more hashing power from graphics cards. ASICs replaced graphics cards as bitcoin mining machines.