Questions Swirl Around NuMiner’s ‘Best in Class’ Bitcoin Mining Rig

Among other discrepancies, the chipmakers supposedly involved with NuMiner said they were unfamiliar with the project.

AccessTimeIconFeb 17, 2022 at 9:54 p.m. UTC
Updated Apr 10, 2024 at 2:03 a.m. UTC
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When a previously unknown company claimed to have created a bitcoin mining rig far superior to the industry standard this month, many in the mining industry raised eyebrows.

Since then, the red flags have kept piling up: An artificial intelligence hardware company claimed a photo of its product was appropriated to create the rig’s marketing materials. The chipmakers supposedly involved with the rig said they were unfamiliar with the project. The rig manufacturer admitted it had misnamed the lab that certified the machine, and did not provide enough information for CoinDesk to corroborate the second lab it named.

It’s still unclear exactly what is going on here. But the situation offers a stark reminder that crypto remains a noisy industry where investors get bombarded daily with bold claims that invite scrutiny. Particularly in the era of publicly traded mega miners, where the financial gains at stake are enormous, investors can never be too careful.

Let’s back up a little.

On Feb. 3, Sphere 3D (ANY), a Toronto-based data management company, announced it was acquiring 60,000 mining rigs for about $1.7 billion from NuMiner Global, a New York-based company that appears to have popped out of thin air.

A search on the New York state company registry yielded zero results for “NuMiner.” The company claims to be affiliated with NuMiner Technologies Ltd., for which practically no information is publicly available.

NuMiner said its rig, the NM440, generates 440 terahashes per second (TH/s) of mining power, or hashrate, with a power efficiency of 20.2 joules per terahash (J/TH), according to the company.

Such specs would make these miners the best on the market by a significant margin. It would top the world’s biggest mining manufacturer’s newest mining computer, Bitmain’s Antminer S19 Pro+ Hyd., which boasts a hashrate of 198 TH/s and efficiency of 27.5 J/TH and uses liquid cooling technology to reduce heat, noise and power consumption.

Sphere 3D’s stock surged more than 40% after the announcement of the deal with NuMiner. Shares have given back some of the gains since then, according to TradingView data.

The doubts

When the news of NuMiner’s deal broke, Luxor Technologies, the crypto software and services company, cast doubt on the story.

“When we saw Gryphon's preorder yesterday, we were highly skeptical but gave the rig the benefit of the doubt due to Gryphon's press release,” Luxor tweeted. (Sphere 3D is merging with bitcoin miner Gryphon Digital Mining in a reverse merger transaction.)

However, Luxor added there are “too many red flags” to consider the NM440 a legitimate mining machine.

Meanwhile, Fred Thiel, CEO of one of the biggest publicly traded miners, Marathon Digital, also tweeted that he was skeptical of NuMiner’s claims and voiced concern about the cooling technology, or lack thereof.

“Based on the picture, I’d be concerned as to how this miner pushes enough airflow to stay cool enough to operate in [a] typical mining environment,” Thiel tweeted. “Definitely not designed for immersion based on the picture.”

Volt Equity, a San Francisco-based investment firm, also was quick to express its skepticism about NuMiner and opened a short position on Sphere 3D stock. Volt tweeted it had reached out to the lab that NuMiner said had tested its NM440 miners, and said the lab denied it ever tested the machine. The lab also told CoinDesk it never tested the machines.

Who runs NuMiner?

There is very little publicly available information about the company, but there are some clues about who is on the team behind this supposedly stellar hardware. NuMiner Global has three people listed on its website, but none of them seem to have much experience in crypto or mining.

The company’s CEO is Iain Kennedy, who most recently was a vice president of enterprise technology and supply chain at Canadian Tire, a retail company involved in the automotive, hardware, sports, leisure and housewares sectors. Prior to that, he was the global chief information officer at BlackBerry, the onetime smartphone pioneer, and global chief operating officer at Spin Master, a Canada-based “global children’s entertainment company.”

The chairman of NuMiner is Tony Melman, who is also Board Chair and CEO of Nevele Inc., a consulting firm specializing in mergers and acquisitions. He also served as CEO of Acasta Capital and of Acasta Enterprises. The latter was a special purpose acquisition company (SPAC) that defaulted on its debt in March 2018. Melman left the company that month, according to the Globe and Mail newspaper. Prior to Acasta, he was managing director and partner at Onex, a major Canadian asset management company, for 22 years.

Melman was also appointed to Sphere 3D’s board as part of the $1.7 billion purchase agreement.

The third person listed in the website is Bruce Brent, ​​an independent director, who is chief financial officer at real estate firm The Matthews Group, president of a family office and chairman on the boards of a renewable energy company and another aerospace firm.

Affiliate NuMiner Technologies doesn’t seem to have much public information either other than the press release naming Thomas Hsu as CEO. The company also appointed a special research and development (R&D) adviser named Richard Lee, who, according to NuMiner Technologies, is a former R&D director with Taiwan Semiconductor Manufacturing Company (TSMC).

NuMiner representatives did not respond to CoinDesk’s request for comment about this entity.

The merger

Upon completion of the deal, the surviving company would take Gryphon’s name. Analysts at Canadian investment bank PI Financial gave Sphere 3D a “buy” rating in October, saying it would become one of the top five mining firms in the world once the merger is complete.

A few weeks later, the merger was delayed by a quarter while the company awaits “regulatory and shareholder approvals.”

Sphere 3D has faced its own troubles. It just settled a bankruptcy case in a Utah court, in which some former and two current directors were accused of securities fraud and misrepresenting information to investors. Sphere 3D is named the defendant in the case, but the bankruptcy actually pertains to a subsidiary. Sphere 3D CEO Peter Tassiopolous and director Vivekanand Mahadevan are the two defendants in the case who are still serving on Sphere 3D’s board.

Sphere 3D filed to dismiss the allegations brought against it, including securities fraud, breach of contract, unjust enrichment and breach of fiduciary duty, but a judge ruled against the company late last year, allowing the bankruptcy case brought by another firm to proceed. The companies disclosed the settlement in a court filing Monday.

“Due to SEC [U.S. Securities and Exchange Commission] regulations, the company has limited ability to share information with media and investors,” a spokesperson for Sphere 3D told CoinDesk in an emailed statement. “The best source for current news and information about Sphere 3D is the ‘Investors’ section of the Company's website.” That section of the company’s website only has details about the company’s financial information including its capital structure, news releases and SEC filings.

The denials

In its press release announcing the mining machines, NuMiner said they had been tested by TÜV Nord’s certified lab BACnet Testing Laboratories. The lab denied the claim in an email to CoinDesk. BACnet pointed to the list of products for which it does quality control, which yielded zero results for crypto mining computers.

NuMiner also claimed it is working “in coordination with” TSMC, the world’s biggest chipmaker; electronics manufacturer Foxconn; and fabless chip designer Xilinx.

TSMC told CoinDesk that NuMiner “is not a direct customer.”

A Xilinx spokesperson told CoinDesk: “To the best of our knowledge, NuMiner has only purchased five computer cards through one of our distributors. We have asked for our company name and logo to be removed from its website, along with any associated marketing materials.”

Electronics maker Foxconn did not respond to CoinDesk’s request for comment.

On Feb. 7, Cerebras, a California-based AI hardware firm, tweeted that a “crypto mining startup” company had misappropriated a photo of its CS-2 system. In an email to CoinDesk, Cerebras confirmed it was referring to NuMiner and noted: “In fact, you can see the Cerebras logo at the bottom of the system.”

Close-ups of Cerebras' (left) and NuMiner's machines
Close-ups of Cerebras' (left) and NuMiner's machines

Other than the Mountain Dew-hued details, the images are pretty much identical.

Cerebras' (left) and NuMiner's machines
Cerebras' (left) and NuMiner's machines

Cerebras said it had contacted NuMiner and the company has since removed the photo from its site. CoinDesk later confirmed it had disappeared.

Gryphon Mining, for its part, told CoinDesk on Feb. 8: “No comments on this topic for now. NuMiner has information they need to release first and it’s not our place to comment at this time."

The rebuttal

NuMiner said on Feb. 10 that it previously misidentified BACnet Testing Laboratories as its testing lab. Instead, the lab is called BTL Inc., a Taiwan-based testing company, certified by TÜV Nord, the company said in a statement.

“The performance specifications of the NM440 have been independently validated by leading global testing company TÜV Nord’s certified lab BTL Inc., a testing company based in Taiwan,” the statement reads.

The company also noted that the original image of NM440 was taken down after NuMiner was “recently made aware of a similarity in the product’s image to another product on the market.” The original image was “drawn for marketing purposes,” the statement said.

“NuMiner is confident its revolutionary technology will transform bitcoin mining, enabling customers to reduce energy usage and increase profits,” the updated statement continued.

TÜV Nord’s Taiwan office confirmed to CoinDesk the BTL lab is certified for ISO:17025, a basic standard for laboratory testing around the world.

However, BTL lab was unable to confirm whether they have tested NuMiner’s rigs. The lab requested a test report number, which NuMiner hadn’t produced at the time of publication.

The results of CoinDesk’s inquiry into NuMiner’s mining rig are far from conclusive and the mining world is still waiting with bated breath to see whether the mysterious company will produce sufficient evidence to convince its doubters there is indeed a new major player in the crypto mining rig manufacturing arena.


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Eliza Gkritsi

Eliza Gkritsi is a CoinDesk contributor focused on the intersection of crypto and AI.

Aoyon Ashraf

Aoyon Ashraf is managing editor with more than a decade of experience in covering equity markets

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