Bitcoin Computers 'Useful Only As Heaters'

They were marketed as supercomputers that could mine valuable Bitcoins - but the US government says they were useful only as room heaters.

The Federal Trade Commission (FTC) is moving to shut down Butterfly Labs in Missouri, claims they deceptively marketed computer designed to "mine" Bitcoin. Butterfly Labs denies the claim.

It says the company charged firms a total of up to $50m (£30m) for computers and services which were delivered so late as to be useless, or not delivered at all.

According to the FTC, Butterfly sold dedicated Bitcoin mining machines costing up to $29,899 (£18,236) - which were useful only as "room heaters".

Bitcoins - a virtual currency - are mined using computers by carrying out increasingly complex algorithms.

Last August saw the launch of the Monarch, described by Butterfly as the fastest Bitcoin miner so far.

But while consumers were asked to cough up thousands of dollars up front, the company has yet to provide any of them with any of the machines.

Jessica Rich, director of the FTC's bureau of consumer protection, said: "We often see that when a new and little-understood opportunity like Bitcoin presents itself, scammers will find ways to capitalise on the public's excitement and interest."

But a spokesman for Butterfly Labs said: "It appears the FTC has decided to go to war on Bitcoin overall and is starting with Butterfly Labs.

"Butterfly Labs is being portrayed by the FTC as a bogus and fake company. To the contrary, Butterfly Labs is very real. As pointed out in court filings Butterfly Labs made last night, Butterfly Labs has shipped more than $33m (£20m) in products to customers and voluntarily granted refunds approximating $17m (£10m) to customers for cancelled orders."

A court hearing is set for Monday, and Butterfly Labs says it will fight the move to close it down.

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