Tradehill open to holding more auctions as it grapples with regulation

Danny Bradbury
Oct 21, 2013 at 13:40 UTC
Updated Feb 4, 2019 at 22:11 UTC

Bitcoin exchange Tradehill says that it may continue with its auction business after a successful first sale of Avalon ASIC miners. The firm operated an auction for ASIC mining company Avalon, in the midst of struggles to resolve its regulatory issues.

This month, the San Francisco-based company conducted a two-week auction to sell Avalon’s 60 Ghash/sec units. Tradehill founder and CEO Jered Kenna has left the door open for future business with other auction clients. “We can’t say when the next one will be, but with the success of this one, there’s no reason why we shouldn’t do it again,” he said.

Tradehill took the auction business from Avalon after it was forced to halt trading in bitcoin due to issues with its bank, the Internet Archive Federal Credit Union, at the end of August.

“We’re not operating as an exchange right now due to operational and regulatory reasons, yet it’s extremely easy to provide services that are all-bitcoin,” said Kenna. “I’ve been friends for quite a while with Yifo [Guo], the owner of Avalon, and we told him that we could auction off his ASIC miners without too many changes to the code.”

Avalon used Tradehill to offer 500 of its two-module Mini units, which use its first generation 110 nm chips, running at 375 MHz. The units consume 600 W in power, and are selling for 6 BTC on the Avalon site. It opened the bidding at 2 BTC via Tradehill, in an auction that ended on 10th October.

Avalon has been criticised in the past for failing to deliver as many as 800,000 of its first-generation ASIC chips. The company began issuing refunds for customers with existing orders in September, and has sent over 50,000 bitcoins from the bitcoin address used to hold pre-order funds.

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Tradehill, which only accepted payments in bitcoin for the units, took a small commission from each sale of the Mini units. The exchange also stipulated that it would only sell units that had already been delivered to it, banning preorders, reflecting a new no-pre-order policy also announced by Avalon.

“Avalon did their best, and I know that looking at how much some of the other companies have delayed, I think Avalon had in my opinion the best record,” said Kenna. “Naturally things will go wrong and there will be delays, and it was always a top concern to make it right for their customers.”

Kenna said that the company would consider working with other companies on auctions in the future, but they would have to be reputable.

“We’re definitely open to it. If we auction off any other products from third parties, we’re going to require that either they are finished and ready to ship upon receiving payment, and it’s going to have to be someone that we think is creditable, because our name is on this as well,” he said. “Or, we’d have to completely escrow the funds.”

While Avalon is selling off modules based on its existing first-generation chips, it is also close to launching its second generation ASICs, with a 55 nm process node, which it says will be shipping around the end of this month. On Friday, it updated a specification for that chip on its Github account, but at the time of writing this was not considered final.

While he remains open to the auction business, Kenna continues to try and resolve his regulatory challenges. “I believe that we are the most serious about regulation in this space, and we didn’t operate until we were integrated with Internet Archive Credit Union,” he said. “We are not the kind of company that will operate if we can’t do it legally.”

Tradehill is still taking auction registrations on its site, even though the Avalon auction is over. This is so that its KYC process will be complete should it decide to run another auction, Kenna said.

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