Chinese Family Accused of Stealing Electricity to Mine Bitcoin
According to a report by local news publication South China Morning Post, a family in Southern China has been caught using stolen electricity to mine bitcoin. The household used many mobile phones and ASIC miners to mining bitcoin and presumably, a host of different cryptocurrencies.
Cryptocurrency Mining Operation
China Southern Power Grip Company first detected the act during a routine audit. The local grid workers from the company’s Meizhou municipal branch grew suspicious when they noticed several cables connected to the mains extended elsewhere. In a post on the Chinese social networking platform Weibo, the company said that the hidden cables led to the upper floor of a household in Fengshun.
Authorities discovered 15 mining computers and 56 mobile phones that were all tasked to mine digital currencies of some kind. Local police have yet to confirm whether the seized mobile phones were legally obtained or not.
Cost of Bitcoin Mining
Specialized hardware known as ASICs are required to mine any meaningful amount of bitcoin. These machines are essentially nothing more than a series of chips designed to perform a specific task repeatedly for given period. The downside, however, is that they tend to have very high electricity usage.
As a result, electricity is one of the significant operational expenditure for any bitcoin mining entity. Since power costs vary from region to region, It could cost as much as $26,000 to mine a single bitcoin in South Korea, while being as cheap as $530 in Venezuela.
On average though, mining a single bitcoin consumes 18,000-kilowatt hours of electricity. So far, it has been confirmed that the family has been charged with stealing 32,490 kWh of electricity for its small residential mining operation.
Mining bitcoin by using mobile phones though, is not a financially sound strategy. These devices not only lack the required processor capabilities, but could also overheat and suffer permanent damage. The local household may have made small profits from smartphone mining, however, as they didn’t have to pay any electricity costs. While mining cryptocurrency isn’t illegal in China, stealing electricity from a source for other than specified purposes definitely is.
The power company has filed a complaint with local police authorities that are currently investigating the case. The names of the accused have been held back for the time being.
Miners Looking at Cheaper Options Abroad
In the past year, several commercial Chinese miners that operated large scale operations decided to shift their rigs to a foreign land in the hopes of cheaper electricity and a more favorable business climate for cryptocurrencies.
Notably, Canada’s Quebec province has emerged as a go-to destination for bitcoin mining operations due to its electricity rates being the lowest across North America. According to Global Times, the province generates an excess of 100 terawatts hours of electricity over the course of a decade, sufficient to light up six million homes a year.
Chinese Miners Facing Tough Times
Jack Liao, who operates several mining rigs across China, said, “It’s a hard time for mining business in China.” In an interview with CNN Money, the bitcoin entrepreneur admitted that he was contemplating moving mining operations to Canada, the United States or Iceland.
China’s People Party sees decentralized cryptocurrencies as a potential economic threat in the making. Despite that though, it has not yet declared bitcoin mining to be illegal nor taken any steps to regulate it.