A number of critics have questioned the credibility of Kodak’s planned bitcoin mining venture, which was unveiled on Monday.
Shares in the US-based photography firm soared when it announced it would be launching a cryptocurrency Kodakcoin and also Kashminer, a bitcoin mining facility at its New York offices.
The latter scheme would require customers to pay upfront to use the platform and make monthly earnings.
However, a number of experts have strongly criticised the programme, according to Buzz Feed, which referenced a brochure linked to KashMiner.
It reportedly stated that investors who paid $3,400 upfront to rent the devices would get back about $375 monthly over two years ‘if bitcoin averaged a price of $14,000 in that time frame.’
It added that the licensing company would take in 50% of the cryptocurrency mined, and pay for costs like insurance and electricity.
Economics professor Saifedean Ammous told Buzz Feed that the problem was that: “the KashMiner proposal doesn’t take into account basic principles of the cryptocurrency. The bitcoin protocol will only release a fixed amount of cryptocurrency per day. As more miners — computer programs that run complex calculations to earn bitcoin — are added and compete with each other, these computations become harder and require more power.”
According to the publication: “He said the notion that the company was keeping 50% of mining proceeds [is] “absurd” given current industry rates, and calculated that bitcoin would have to maintain an average price of $28,000 to offset the expected increase in computing difficulty and deliver the brochure’s suggested returns of $375 a month or $9000 over two years.”
Nicholas Weaver, a lecturer at the University of California, Berkeley, was also quoted, saying: “To expect computing speeds, known in the cryptocurrency world as “hash rates,” to remain steady “is ridiculous.”
“Over the last 6 months as more people have started to mine bitcoin, the hash rate has more than doubled, meaning you receive half as many bitcoins for the same amount of computing power.”
In response to the criticisms, a Kodak spokesman reportedly said an official statement would be made in two to three weeks.
KYC360 made efforts to reach Kodak about the criticisms, but did not get an immediate response.
The full Buzz Feed article can be viewed at buzzfeed.com.