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Chinese Police Raid Illegal Bitcoin Miner’s Home, Seize 200 Computers

Chinese Police Raid Illegal Bitcoin Miner’s Home, Seize 200 Computers

Reading Time: 2 minutes by on June 25, 2018 Altcoins, Bitcoin, Blockchain, Crime, Mining, News
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A private residence in Anhui Province, Eastern China has become the scene of yet another incident of electricity theft in an illegal cryptocurrency mining operation, with a police raid revealing an illicit setup of 200 computers mining bitcoin and ethereum.

The story, which was reported in Chinese media is yet another instance of a new and growing category of crypto-related crimes which perpetrators wrongly think of as ‘victimless’ because nobody suffers direct or immediate harm due to it.

Acting on a tip-off from a suspicious local power grid operator, police swooped on the residence of the suspect only known as Ma and conducted a search which revealed he had put together a coin mining setup made up of 200 computers.

Electricity Theft

According to police sources, the local power grid operator reported “abnormal power usage” from the address, and upon investigation by the police, it was discovered the electricity meter connected to the mining setup had been short-circuited in a crude attempt to dodge the associated electricity bill.

From power company records, it was alleged Ma stole approximately 150,000 kW (150 Mw) hours of electricity in just over a month of the mining operation. The suspect revealed to police he bought the computers in April 2018 in hopes of getting a piece of the cryptocurrency mining pie, only to discover that mining is a power-intensive activity that would leave him with a daily cost of more than 6,000 yuan ($927) which he apparently could not afford.

His solution was to devise a means of stealing electricity from the power company for his mining operation in hopes of turning a profit. When he was apprehended by police, Ma said he had not yet made a profit from the scheme.

Growing Crypto Crimes

The central security mechanism of blockchains as they currently exist is the hashing process, which necessarily means that coin mining is a necessary and often rewarding process. It is, however, also heavy on power consumption and it has been described as an “environmental disaster” for its impact of emissions through power generation. It has been estimated bitcoin mining alone uses more electricity annually than the entire country of Iceland.

While crypto mining was once an activity that could be carried out using the classic ‘man-with-a-laptop’ model, it has long since ceased to be profitable at any meaningful scale for small users and is now heavily dominated by so-called ‘mining farms’ using high-speed ASIC hardware optimized for hashing. Many who cannot afford to stake a claim in such cluster setups have started to engage in activities that essentially amount to theft, and sometimes criminal damage to support their coin mining capacity.

Electricity theft, in particular, has become a massive problem in China, with similar stories to Ma popping up almost weekly. It has also been reported in Venezuela and the U.S. Another burgeoning illegal scheme that boosts crypto mining capacity is known as “cryptojacking.”

This is the hijacking of the processing capacity of hardware or websites using malware to plug into a crypto mining network of commandeered devices controlled by a hacker. Such attacks have been reported in places as varied as the official UFC streaming website and the San Diego Zoo website.

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