Better Business Bureau (BBB) serving Central, Coastal, Southwest Texas and the Permian Basin has been flooded with complaints about CoinTerra, an Austin-based company that manufactures computers used to “mine” bitcoins. Complainants say they haven’t received promised refunds.
Many consumers sought refunds when the company stated in February that the machines they pre-ordered late last year would not perform up to the specifications it advertised. Consumers who complained to BBB say they spent over $6,000 per unit for the devices. These consumers are not only reporting complaints from within the United States, but from all over the world, including Europe and Australia.
Although a few of their customers told BBB they had received promised refunds, many state that they have not received refunds after several weeks. Some also state that the business does not respond to calls or emails.
BBB confirmed via phone and email as well as a visit to the business that it has been receiving BBB correspondence. However, the company has not yet provided an explanation for the wave of complaints, nor provided BBB with responses to the majority of the complaints.
Isaac Ware of Alvin, Texas ordered a Bitcoin miner from CoinTerra in January 2014 and paid $6,500 for a device that was to have 2 TeraHash (TH) per second of computing power. However, he said the company announced in February that the machine he ordered would only perform at 1.6 TH per second and would use more electricity than originally stated. He said the company promised to issue a refund, but has not done so after more than four weeks.
“It is very important that specifications for a miner are accurate,” Ware said. “They advertised a 2 TH miner at a specific number of kilowatts of electricity to keep within the amount of expense for electricity. Theirs was the best price at $3 per GH,” said Ware. “I chose them over several competitors who have been able to deliver machines according to specifications. If it had come in within specs, I wouldn’t have requested a refund. I put in for a refund due to their lack of updates. They emailed back about their updated design and asked if I wanted to reconsider my refund request and upgrade to the new design. I saw the release information and said no.”
Song Smullen of Brooklyn, New York, spent over $6,000 for a bitcoin miner from CoinTerra on Dec. 1 that was advertised as performing at 2 TeraHash per second. When the company announced the machines’ actual performance specifications, Smullen said he asked for a refund. He still hasn’t received it as of May 19.
Smullen said the CoinTerra machine would cost him more to operate than the machine he thought he was ordering. “I would be using much more electricity,” he said. “I pay 38 cents per KWH for electricity in New York. The original specs called for $250 less electricity and 30 percent more earnings per day per machine.”
Smullen said it would be impossible to make money with the machine CoinTerra produced. “Even at the specs they advertised, I would only break even in 320 days,” he said. “Without them meeting specs, I could not make back my investment.”
About bitcoins (From the Financial Industry Regulatory Authority (FINRA)):
Not legal tender. Bitcoin is a digital payment system that is not issued by any government and is not legal tender; no law requires consumers or business to accept bitcoin as payment. It is only worth what businesses and consumers are willing to pay for it.
Where bitcoins come from. Bitcoins are produced by a process called mining. Bitcoin miners use software algorithms to add transaction records to a public ledger and verify legitimate bitcoin transactions made around the world. For that work, miners receive transaction fees. New bitcoins are created by solving certain mathematical problems.
Buying and selling. Bitcoins can be bought and sold online or at physical locations. A growing number of businesses and exchanges allow customers to buy and sell bitcoins using cash, credit cards, money and other methods. Some retailers also accept bitcoin as a form of payment.
What are bitcoins worth? Bitcoins can be traded for traditional currency at rates that fluctuate. Bitcoin prices have been volatile and subject to wide price swings. A bitcoin was worth just over $650.52 as of June 4, 2014. In late 2013, they were valued at over $1,000 per coin.
BBB offers the following advice for shopping online: