Yet another Bitcoin miner manufacturer, CoinTerra , now faces legal action for not fulfilling an order when it originally promised to. CoinTerra is the third Bitcoin-related startup to face litigation for breach of contract and/or fraud in recent months.

The CoinTerra lawsuit was filed in late April 2014 by an Oakland, California-based man seeking to be the lead plaintiff in a proposed class-action lawsuit. Lautaro Cline, the suit alleges, purchased a TerraMiner IV in October 2013 for delivery by January 2014. The company promised, he claims, that this miner would operate at two terahashes per second and would consume 1,200 watts of power. It did neither.

However, Cline’s suit also claims that CoinTerra did not deliver the miner until February 2014, and it “operated well below the speed advertised and consumed significantly more power than CoinTerra represented, causing Plaintiff to suffer significant lost profits and opportunities.”

Neither CoinTerra nor its attorneys responded to Ars’ request for comment.

Cline’s attorney, Edward Mullins, told Ars that his client and CoinTerra are currently seeking mediation—an arrangement that takes place privately and outside of the court system where the two sides negotiate a deal.

“We hope to have it resolved sometime this summer,” Mullins said. “If it doesn’t work out then we will go forward [with the lawsuit.]”

Last week, CoinTerra formally asked the court for more time so it could arrange mediation.

Another firm, HashFast, recently sustained several lawsuits and arbitration cases. As a result, it filed for Chapter 11 bankruptcy protection earlier this month (PDF). Rival firm Butterfly Labs has also been bogged down with similar delays, allegations of fraud, and lawsuits.

CoinTerra’s struggles add to the ever-increasing list of legal cases involving alleged Bitcoin-fueled fraud: The Bitcoin Savings and Trust hedge fund collapse; the high-profile Silk Road takedown (a treacherous story combining Bitcoin, drugs, and alleged murders); and earlier this year, the implosion of Mt. Gox, once the currency's largest exchange.

"Not fair compensation"

The CoinTerra suit outlines a familiar tale: a company advertises a certain product with a certain hashing power—essentially the speed at which it can mine bitcoins—but fails to deliver.

Back in August 2013, CoinTerra announced that it had raised $1.5 million in venture capital. That money would likely to be used for the production of the TerraMiner IV, a two terahash per second ASIC Bitcoin miner that was originally priced at $13,999 and was set to ship in December 2013.

Initially, CoinTerra seemed well-placed to succeed. The startup was founded by a team that appears to have extensive experience in the industry. The company’s CEO, Ravi Iyengar, was Lead CPU Architect at Samsung for two years and worked out of the Samsung Austin Research Center. The head of the company’s advisory board is Naveed Sherwani, an Intel veteran and current chair of the Global Semiconductor Association Technical Steering Committee. Sherwani literally wrote the book on very-large-scale integration (VLSI) semiconductor design and production.

But even they couldn’t seem to get their act together. While the TerraMiner IV’s price got slashed, the ship dates started to slip. In this case, Cline purchase his TerraMiner IV on October 3, 2013 and paid $6,289.20 for it. When the TerraMiner IV didn’t arrive by the end of January 2014, CoinTerra offered its customers two compensation items to apologize for missing its deadline.

The first was a 15 percent discount for future orders from CoinTerra, while the second was a full refund and five percent coupon. Cline responded to CoinTerra saying that these options were “not fair compensation.” Instead, he proposed that CoinTerra provide a hardware replacement or an exchange when the company had a printed circuit board that could run at two terahashes per second. The company never responded, Cline claims.

In the end, the Oakland man says he received his miner on February 25, 2014, and it only operated at 1.6 terahashes per second while consuming 2,100 watts of power.

In a blog post published last Thursday, CoinTerra said that only a "small percentage" of customers had requested a refund.

"Although it has sometimes taken longer than we had hoped, we are now making good progress in addressing the backlog and processing remaining requests," it wrote. "As of today, we have fulfilled well over 50 percent of the pre-order refund requests made, and we are working towards resolving the remaining valid refund requests in the next 20 days."

Millions and millions…

While CoinTerra, HashFast, and Butterfly Labs struggle, there is one company that seems to have figured things out.

KnCMiner, a company based in Sweden, just recently boasted the release of a 20-nanometer ASIC processor, dubbed “Neptune.” Its third batch of Neptune boxes (with five chips inside) sells for $5,995.

Nanok Bie, the new chief marketing officer of KnCMiner, told Ars on Monday that the company is about to announce its first-year financials soon. He said the company expects to post around $110 million in revenue after its first fiscal year of operation, and it has just under 100 employees. He declined to say whether the company is profitable.

Bie noted that as far as he knew—and he was only recently hired a few weeks ago—the company has not yet faced any lawsuits in Europe. Similarly, US federal court records show that no suit has been brought against KnCMiner.

While Bie was unable to explain why his company has been more successful than its competitors, he noted that it has always put target ship dates as quarters, rather than months or weeks.

“If you ordered [a Batch 3 Neptune] today, we will deliver it in [the third quarter of 2014,]” he said. “We don’t make promises that we can’t keep. I would have to say Q3. It’s hard for me to say what the other guys are doing.”