At the 2018 Consumer Electronics Show (CES), iconic camera company Kodak unveiled a new bitcoin mining scheme using its branded bitcoin miner, the KashMiner. The miner is created and run by a company named Spotlite, which works in the bitcoin mining industry, but has licensed the Kodak name.
Shortly after being presented, the KashMiner is now being branded as a scam. The bitcoin mining scheme essentially consists of users paying $3,400 upfront to rent the KashMiner for two years, instead of buying it to use it themselves.
Per Kodak, the KashMiner will earn the user a steady $375 a month throughout the two-year rental period, after the licensing company takes a 50% cut for covering electricity, insurance, and maintenance costs. This means users, according to Kodak’s math, would earn a total of about $9,000, taking into account bitcoin’s current price of $13,700.
Problem is, things aren’t so simple. Bitcoin’s price can be extremely volatile, so a bitcoin mining scheme promising users a fixed income is dubious at best. Given that miners keep on improving their systems to best one another, Kodak’s KashMiners would have a decreasing bitcoin generating capacity.
I work for a company that is building a Bitcoin mining facility. I’ve spent countless hours building complex spreadsheets, modeling price fluctuations, scouting green energy, accounting for difficulty…
— Laz Alberto (@LazAlberto) January 9, 2018
As one industry expert put it, actual profits may be less than half of those promised by Kodak if we take into account that bitcoin mining difficulty rises while the output drops. Adjusting the math, actual profits might be about $2,450, instead of the promised $5,600 ($9,000 minus the $3,400 paid upfront).
There is no way your magical Kodak miner will make the same $375 every month, unless Bitcoin mining difficulty stays the same. It is currently increasing at around 15% a month, so mining output should drop around 15% a month, too. Good luck to everyone who bought this deal! pic.twitter.com/0xA2HNtHFc
— Saifedean Ammous (@saifedean) January 10, 2018
Granted, bitcoin’s price will likely increase over time, so profits may be a little higher . According to Wall Street strategist Tom Lee, co-founder of Fundstrat Global Advisors, the flagship cryptocurrency may hit $20,000 by mid-2018. It could, however, make more sense to just buy bitcoin.
Nicholas Rangel, a Kodak spokesperson, refused to answer questions about the math behind the company’s brochures that promise a monthly income of $375 and that, in all-caps read “IN MATH WE TRUST.” Rangel added that the company would make an official announcement in two to three weeks.
The bitcoin mining scheme’s critics haven’t seemingly put off customers, as according to the BBC, Spotlite’s existing capacity is already sold out. A company representative stated
“At this time we have 80 miners, and we expect another 300 to arrive shortly. There is a big pile-up of demand.”
Kodak’s cryptocurrency dive
The embattled photography giant didn’t just unveil the bitcoin mining scheme. As reported by Core Media, Kodak is also partnering with Wenn Digital to launch a blockchain-based rights-management service. The service, aimed at tracking the online use of licensed photographs to ensure photographers get paid for their work, will use its own cryptocurrency, KodakCoin.
Some critics even stated that Kodak’s move is evidence of a bubble in the cryptocurrency industry, as the company’s stock surged 117% on the announcements. At press time, Kodak’s stock is trading at $8.75, down from a high of $10.7 this week.