Citing concerns about the security of the Sia network, David Vorick (the founder of Sia and CEO of Nebulous Labs) wrote a blog post detailing these concerns in June 2017 and outlining the team's plan to create the first ASIC device for the Sia network. An auxiliary goal was the hope that a high number of Obelisk sales would provide funding for Nebulous and the development of Sia. Obelisk Inc was created as a result - a company touted to be separate from Nebulous Labs, but holding many of the same board members. Obelisk began taking pre-orders at the end of June 2017 for their own ASIC device, dubbed the Obelisk SC1. The pre-orders were taken in batches, and the earliest delivery was promised no later than June 30, 2018, a full year later.
Initial Obelisk SC1 pre-orders sold for $2,500 USD in the first batch, and around $1,600 in subsequent batches. As there were no other ASIC devices on the network at the time, Obelisks were expected to mine approximately 150,000 SC a month upon launch of the devices - with a Siacoin price of about $0.01 at the time, this would have provided an excellent ROI of about $1500 a month. An additional benefit to purchasing a "Batch 1" device was the promise that Batch 2 would not be shipped for at least 6 weeks after the first batch, thereby giving the early adopters who took the most risk an exclusivity period to mine and recover a higher share of the block reward in order to see better returns on their bigger investment.
In November 2017, Obelisk also launched pre-orders for a Decred miner, dubbed the Obelisk DCR1. The claim was that the Decred algorithm of Blake256 was similar to that of Sia, so the chips of the SC1 were fairly easy to modify for the Decred network.
Third-Party ASIC Competition
In January 2018, Bitmain (a prominent ASIC manufacturer) suddenly released the Bitmain A3, a mining appliance for Sia's Blake2b algorithm. The unit had hashrate specifications similar to what Obelisks were advertised at (~800 GH/sec), at slightly lower efficiency. This was a huge blow to the Obelisk project for several reasons - primarily, for buyers, their guarantee of excellent ROI (or even any sort of return of their original investment at all) was gone. For Nebulous/Obelisk, another manufacturer beating them to market meant that they had less control over the security of their network without knowing who Bitmain A3s were sold to, how many were sold, or where they were concentrated. The situation caused a lot of high tensions and disagreement within the Sia community, with several users saying that Sia should invalidate the other devices. The official development team stance was decided to be that they would take no action at that time unless the other devices act maliciously and attempt to attack the network.
In April 2018, Halong Mining released a Blake2b miner as well, dubbed the B52. This ASIC had specifications well exceeding both the Obelisk SC1 and Bitmain A3, at about 3.8TH/sec - nearly five times the A3 and SC1. It was later discovered that these units were made by Innosilicon, and are now sold as the Innosilicon S11 at 4.3 TH/sec. The S11 continues to be the dominant Blake2b/Sia miner today. Similar Decred miners like the Halong B29 were also released.
With the release of multiple third-party ASIC miners before Obelisk could complete manufacturing and ship units, ROI expectations for the Obelisk SC1 and DCR1 were essentially gone, and the units were called space heaters by many buyers for their uselessness at that point.
Lackluster Specifications and Manufacturing Trouble
At original launch of the SC1 pre-orders, minimum specifications were promised to be at least 100 GH/sec. This later increased to 200GH/sec, and rose as high as 800+ GH/sec. DCR1 specifications were listed at 1500+ GH/sec. The team was very confident that they could meet or exceed these specifications, and repeatedly stated that the chips would likely be better than the minimums stated. However, in May 2018, an Obelisk update revealed that specifications for the Obelisk devices were going to be lower than expected and advertised. In June 2018, it was further revealed that hashrates on test chips are varying greatly, and that test chips are running best at very high temperatures (close to 100C).
Several setbacks in the manufacturing process threatened to delay shipping of the units beyond June 2018. The contracted chip manufacturer in China dropped out last minute in early 2018 before manufacturing started, fairly late in the timeline. There are rumors that Bitmain may have had some role in interfering with Obelisk's attempted business dealings in China, though nothing has been put forth as solid evidence to back up this accusation.
New manufacturing was found in the United States, but the delays in China resulted in a large amount of time and money wasted. With the remaining time and money, combined with the chip hashrate troubles, Obelisk Inc was unable to afford to put enough chips in each unit to hit the target hashrates. It's thought that simulations provided by the Chinese manufacturer which indicated that the high hashrates were possible were incorrect, leading to the reduction in hashrate on the final production chips in the US. Delays in the chip manufacturing process, along with other delays like finishing firmware, continued into June 2018 and beyond. As delays pushed into the promised shipping date, Nebulous Labs and/or Obelisk Inc took Nebulous employees off the development of Sia to work on finishing Obelisk units, stalling the development of Sia and providing additional ammunition for those with legal claims that the two companies were not actually separate.
Missed Shipping Date and Legal Troubles
The shipping date of June 30, 2018 was indeed missed for Batch 1 units, opening up Obelisk Inc to a number of legal and regulatory troubles.
Obelisk has denied refunds to Batch 1 buyers, which violates FTC laws regarding refunds in the event of delayed shipping. Late on August 2, 2018, David Vorick (Obelisk and Nebulous CEO) announced in the Obelisk Discord that refunds would be issued, but that the company did not have enough money to fully refund buyers and that estimated refunds if all buyers were to request one was $35 per unit. The announcement instructed users to email Obelisk with a refund request and their order number to email@example.com - however, the announcement was removed less than 24 hours later with David saying he spoke without consulting the Obelisk board, and that refunds would not be issued and Obelisk would continue to work to ship units and find a solution acceptable to all buyers. With the refund announcement, statements were also made that there would now be no exclusivity period for Batch 1 buyers as originally promised, but it's unclear if that statement was also retracted.
As a result of the delays and the denial of refund requests, several users have filed complaints against Obelisk Inc to various regulatory agencies such as the FTC and their state's Attorney General. Some buyers have also vowed to pursue individual or class action lawsuits. There is concern that any lawsuit directed at Obelisk may also risk taking out Nebulous Inc (and therefore the Sia project), as the separation between the two companies is questionable considering that many of the same board members exist between them, and several comments have been made by David implicating that the companies are closely connected and not actually separate. Any legal action is likely to take some time to play out, and may not see a conclusion for several years.
Hidden Killswitch on SC1 Units
It was revealed fairly early on by David Vorick that Obelisk SC1 units were built with a function referred to as the "knife" - a small hidden additional circuit that would allow the algorithm the units hash to be changed from Blake2b to an alternate version of Blake2b. The exact details of the algorithm were kept secret. It was explained that the "knife" could be used as a killswitch to brick ASICs from other manufacturers, such as Bitmain and Innosilicon, if they were ever used to attack the Sia network. By installing a firmware update on the SC1s, users could activate the hidden circuit and hash the alternate algorithm. With a fork of the Sia blockchain to also use this algorithm, this would effectively prevent all other ASICs from mining the Sia network if they didn't have the same hidden circuit for the alternate algorithm.
At various times throughout the history of Obelisk, it has been suggested by users that the killswitch be used to kick all non-Obelisks off the Sia network. Arguments include to retaliate against the other manufacturers for what some users consider to be shady practices, but the primary argument for using the killswitch is typically to return Obelisk SC1s to a profitable status by removing all competition from the network. Various proposals around using the killswitch have been put forward, including what's referred to as the "Community Fork" proposal intended to grant Obelisks exclusive mining to try to remove Obelisk Inc from any legal troubles they face.
On October 1, 2018, Nebulous announced their intention to fork the Sia network to invalidate all other ASICs except Obelisks by activating the alternate algorithm at the end of October 2018. See the Sia Network Forks page for more details on the decision.
DCR1 units do not have a killswitch circuit (at least, that has been announced to date), and so Obelisk DCR1 buyers for the Decred network are stuck competing with other existing ASIC manufacturers and devices.
Obelisk SC1 and DCR1 Batch 1 units finally started shipping late August 2018, and continued to slowly ship through October 2018. SC1/DCR1 Batch 2 has yet to enter production as of early October 2018.
Final SC1 Batch 1 hashrates have fallen around 500-550 GH/sec, and DCR1 final specifications have fallen around 1,000 GH/sec - lower than the promised 800 GH/sec and 1,500 GH/sec. Significant variation has been observed between chips, boards and units. Some users have reported lower hashrates with firmware updates, and higher hashrates with higher chip temperatures.
Anticompetitive ASIC Fork
Nebulous has announced their intention to fork the Sia network to invalidate all other ASICs except Obelisks by activating the alternate algorithm. The fork occurred at block 179,000 of the Sia network on October 31, 2018. See the Sia Network Forks page for more details on the decision. Obelisk SC1 owners must update firmware to v1.2.0+ using the Obelisk Scanner tool to be able to mine this fork.
There is no fork planned for the Decred network, and it would not do any good if there were because the DCR1 does not have the ability to switch to an alternate algorithm like the SC1.
Previously, Obelisks were considered to be unprofitable and assumed to never see ROI because of the saturation of the mining environment by other ASICs before Obelisks shipped. Now, with the fork announcement for the Sia network, Obelisk SC1 exclusivity would mean Sia Obelisks have a chance at profitability and ROI again. Decred Obelisks are still likely unprofitable, with an estimated $60-75/month in mining revenue before electricity costs ($10-25/month after average colocation fees which include electricity).
Legal threats continue, including movement on a class-action lawsuit against Obelisk Inc for the missed shipping date of Batch 1 units and the refusal to give refunds. It is unclear if any action or resolution will come from these threats, or from the various reports filed to regulatory agencies. Any legal or regulatory actions may take several years to fully resolve.