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Heaven for Bitcoin Miners? Iran Officially Legalizes Crypto Mining

The Iran Chamber of Commerce, Industries, Mines and Agriculture recently published a statement that the Iranian Economic Commission has approved a mechanism for digital coin mining. This is in line with Iranian internal laws that facilitate the growth of mining firms across the country.

Crypto mining in Iran is gaining popularity with its cheap electricity prices. The Iranian Economic Commission has finalized a tariff scheme for cryptocurrency miners, in which the electricity costs for crypto mining are similar to the tariffs used for electricity exports. Energy Minister Homayoon Ha’eri said the finalized tariff scheme is subject to the approval from the Iranian cabinet. While the exact price scheme is not specified, Ha’eri believed that the price is subject to market factors such as the fuel prices in the Persian Gulf.

The governor of Central Bank of Iran Abdolnaser Hemmati shared a similar view with Ha’eri and suggested two main conditions for the legalization of crypto mining: crypto mining should be based on the price of electricity exports and mined cryptocurrencies should be circulated within the Iranian economy.

The rate of Iranian electricity export to neighboring countries ranges from $0.7 to $0.10 per kilowatt-hour. However, Bitcoin miners are enjoying subsidized electricity at $0.05 per watt, and it is the same rate as industrial and agricultural operations.

Ukrainian Security Department And Law Enforcement Uncover a Crypto Mining Farm in a Railway Subdivision in Lviv

According to a report, Ukrzaliznytsia has uncovered a hidden cryptocurrency mining farm in the Lviv railway subdivision, which has been making use of the country’s electricity without paying for it. This secret mining company was discovered by Ukrzaliznytsia’s security department, in conjunction with law enforcement officials.

Oleg Nazaruk, Director of the Department of Economic and Information Security of Ukrzaliznytsia JSC, was the person that reported the news. He noted that more than 100 computers were found, and each of these computers could generate Bitcoin and utilized Ukraine power generation, which has resulted in a huge loss.

“During the inspection of the premises where the so-called farm was located, more than 100 pieces of computer equipment were identified that were generating bitcoins. The equipment mentioned above was connected to the Ukrzaliznytsia power grid. The estimated amount of losses since the beginning of the year is UAH 1 million,” he commented.

The report made reference to Ukraine’s law, which it claimed prohibited the issuing and circulation of cryptocurrency in Ukraine, making cryptocurrency-related activities illegal in the country.

The sample collected by the security agents that uncovered the mining company has been sent to the Ternopil Police Department of the Main Directorate of the National Police in Ternopil Oblast for verification.

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Chinese Authorities Pressure Bitcoin Miners to Scale Down Operations

Authorities in Sichuan, China has been reportedly pressuring Bitcoin miners to scale down their operations due to electricity shortages. During the dry season, extending from October to April, the electricity supply drops in the province.

China has been reported to have been controlling two-thirds of the global Bitcoin hashrate, while Sichuan has been accounted for over 50%. From May to September, the wet season has been advantageous for miners as the province’s hydropower energy has been abundant. During the dry season, local authorities made sure to allow sufficient power supply to go through for residents and local businesses, rather than mining farms, where excessive amounts of electricity are used to run their mining operations.

The Sichuan Garze Tibetan Autonomous Prefecture’s local government demanded a cleanup of the region’s mining sector, as reported by the Asia Times.

Authorities in the region have come together to discuss the issue, including regulatory agencies, tax administration, and the local branch of the state grid operator.

In mid-November, the regulators in Inner Mongolia, the Autonomous Region in China, tightened their grip on crypto mining companies to clean up the rectification of crypto mining companies in the region.

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Tables Turn for Japanese Man After Being Convicted for Secretly Installing a Crypto Mining Program

The Tokyo High Court has dismissed the acquittal of a 32-year-old Japanese man who had been let off the hook by the Yokohama District Court in March 2019 after being accused of unlawfully inserting a cryptocurrency mining program dubbed Coinhive. The high court reversed the previous ruling as it found him guilty of secretly inserting and using Coinhive on visitors’ computers upon visiting his website without their permission or knowledge.

Coinhive operated for malicious gains

The court noted that the man who is a website designer ran the Coinhive program for egocentric motives as he did so without the consent or awareness of visitors. As a result, he operated it for personal gain, and his action was concluded to be a malicious crime that got him fined 100,000 yen, approximately $910.

Tsutomu Tochigi, the presiding judge, acknowledged, “Visitors were not informed of (the mining program) or given the chance to reject it.”

It is alleged that the website designer installed the Coinhive program on his site between October and November 2017. His indictment occurred in March 2018, but he was not detained.

In March 2019, the Yokohama District Court freed the website designer because it noted that Coinhive did not have significant effects on the visitors’ computers. It also stated that investigators had not cautioned him against the usage of the program before charging him.

The Tokyo High Court was, however, of a contrary opinion because it stipulated that these factors were not substantial for acquittal.

Nevertheless, the website designer depicted his displeasure with the ruling as his lawyer revealed that he could appeal.

According to a Cipher Report, as of November 2019, the cryptocurrency sector had lost a whopping $4.4 billion in thefts and scams. It is the reason why concerns are raised about secretive crypto mining programs, such as Coinhive.

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New York-Based Power Plant Greenidge Generation Mines $50,000 Worth of Bitcoin on a Daily Basis

According to a Bloomberg report, Greenidge Generation power plant in New York has learned to do things differently as it’s currently using electricity to mine about $50,000 worth of Bitcoin on a daily basis.

Atlas Holding, the private equity firm that owns the facility, installed some 7,000 crypto mining machines in its power plant in Dresden, New York.

Greenidge’s 65,000-square-foot facility was initially built in 1937 as a coal plant before eventually being closed down in 2011. The plant remained dormant for five years before Atlas Holdings, Connecticut-based private equity company, converted it into a natural gas plant in 2016 to generate clean energy.

Due to its revenue generated from crypto mining, Greenidge can now operate all year round. The plant was only able to operate in the summer and winter seasons when there is a high demand for electric power prior to generating revenue from crypto mining.

Because of the high power that crypto mining machines use in their operations, countries have initiated stricter measures to discourage miners from conducting their mining activities. Some of these measures involve increased electricity fees, which have compelled most miners to move to other cities with favorable electricity billing.

But Greenidge mining machines use “behind the meter” power that makes mining operation less expensive. The mining machines only consume about 15 megawatts of power of a day out of the 115 megawatts of capacity that the power plant generates. The machines incur the minimum cost of production that can be easily offset by other power-related services that Greenidge plant supplies to New York state.

Bitcoin Halving

Crypto miners are afraid that the Bitcoin mining will become unprofitable after the halving event in May when miners would see their rewards slashed in half. However, the plant’s owners believe that the mining facility will remain profitable due to its “unique position.” Tim Rainey, Greenidge’s CEO, said, “The company is in a favorable market position regardless of the outcome of the Bitcoin halving. Our cogeneration facility has a unique position, hence, making us having the capacity to generate money and make progress in down markets and enable us to handle downside volatile market swings.”

The halving that is expected to happen in May 2020 occurs every four years and slashes the rate at which the Bitcoin network issues new coins by half. The process of halving limits the number of new Bitcoins, which can be added in the network to ensure that the more scarce it becomes, the greater the demand it will be. The event will affect Bitcoin miners who will be required to have even more processing power in crypto mining equipment, which implies higher energy consumption. Miners will take a longer time to complete the transaction while getting half the reward for their efforts.

While Bitcoin miners are calculating the impact of May’s upcoming halving, the Greenidge Generation plant is not worried as it is well equipped to continue with its activities.

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Riot Blockchain Sees Growth in Q1 2020 Despite COVID-19 Disruption

Miners have been faced with the impacts of the recent Bitcoin halving and the coronavirus pandemic. The adjustment of the Bitcoin’s network mining reward size, known as Bitcoin halving, gets triggered every 210,000 blocks mined, around every four years, usually has an effect on crypto markets.

The mining industry has faced immense pressure during halvings, as the reward for producing a new block on the Bitcoin blockchain is reduced by half. Miners would need to rely on the surge in coin prices or a higher transaction volume to ensure profitability. While anticipating the Bitcoin halving event, some major cryptocurrency players are still bullish on mining.

Who is still bullish on mining?

Riot Blockchain Inc., one of the few listed public cryptocurrency mining companies in the United States on Nasdaq, reported financial results for Q1 of 2020, which ended on March 31. The company has seen a small growth in its earnings per share during this quarter.

Riot Blockchain previously changed its name from Bioptix in 2017 after shifting its focus from biotechnology to Bitcoin mining. The company’s share price skyrocketed to a $38 high in late 2017, which then fell to $110 after Riot was accused of misleading investors by capitalizing on public interest in blockchain to drive up its share price. These claims have been dismissed on the basis that it was not proven that the company’s name was changed to drive up the share price.

During Q1 of 2020, Riot has announced a few milestones, including the termination of the Securities and Exchange Commission (SEC) investigation into Riot Blockchain. The company received a letter from the SEC on January 29, which indicated that the authority does not intend to recommend an enforcement action against Riot, and was officially announced on April 9.

Riot Blockchainpurchased has purchased over 4,000 Bitmain Antimer S17 Pros for its Oklahoma mining facility in December 2019, and was fully operational during Q1 2020. This resulted in a 146% overall increase in Riot’s hashing power capacity to around 248 petahash per second.

In the first quarter of 2020, Riot produced 281 newly minted Bitcoins and increased its Bitcoin inventory by 60 percent, reaching 821 Bitcoins. Working capital also increased to $17 million from $9.3 million during the quarter, and total liabilities also dropped by almost 10 percent. The company’s total mining revenue also increased by 68 percent to $2.4 million during this period.

Bitmain Launches Cheaper Mining Machines After Bitcoin Halving and Losing Market Share to MicroBT

Bitmain has launched a cheaper version of a Bitcoin mining machine, Antminer T19, compared to its more pricy predecessor Antminer S19.

Bitmain has been losing its market share to its rival, MicroBT, which launched its M30S++ Bitcoin miner in April this year.

The Antminer T19 has a hashrate/ mining power of 84 terahash per second (TH/s), and power efficiency of 37.5 joules per terahash (J/TH). The price of this new mining machine is around $1750, while the S19 costs around $1785.

According to F2Pool, the new mining model can generate a profit of around $3.14 per day, while the S19 could generate around $3.95 per day.

Manufacturing delays have been caused by the coronavirus outbreak, causing a reduction in growth in Bitcoin’s computing power. Bitmain has been dominating the cryptocurrency mining hardware industry since 2017, and has even tried to file an IPO with the Securities and Exchange Commission (SEC) in the United States.

Canaan Creative, another Bitcoin mining titan, as well as Bitmain have failed during the crypto winter in 2018 to conduct the offering. However, Bitmain has discreetly filed an application with the US SEC in late 2019, and anonymous informed sources according to a Tencent report has revealed that Deutsche Bank may have been sponsoring the application.

Bitcoin halving

The latest Bitcoin halving took place in May 2020. Each time Bitcoin halving takes place, the number of Bitcoins entering circulation every 10 minutes, also known as block rewards, will fall to half, to 6.25 from 12.5 in May.

As the amount of supply of the crypto is decreasing, the demand most likely will stay the same, but possibly lead to an increase in Bitcoin’s price. Experts believe that there will be less Bitcoin available in the market if the miners will be selling less of the cryptocurrency.

MicroBT CEO alleged dispute with Bitmain

The Chinese Police have just resumed its investigation of intellectual property infringement involving Yang Zuoxing, CEO of Shenzhen Bit Microelectronics Technology, and Bitmain.

In the course, Yang was being arrested to help in the investigation of the patent of Bitmain he allegedly infringed upon and if found guilty, would be sentenced to prison.

The news about his arrest was revealed by insiders who were around when the police took hold of him on the basis of intellectual disputes in Bitmain.

Yang was once staff in the company; working as the director of processor design, he developed the Antminer S7 and S9 models. However, Yang exited the company when the talk over equity stake was a debacle.

Following from this, Bitmain took MicroBT to court alleging that Yang has infringed upon their patent.

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Malaysian Crypto Miners Caught Stealing $59,700 of Electricity from State on Monthly Basis

Malaysian police recently arrested five cryptocurrency mining operators that were caught stealing electricity from a state-owned power firm, Sarawak Energy Berhad (SEB).

Officials Crack Down on Cryptocurrency Mining Operations

During a joint inspection put together by SEB, Malaysian police and the Electrical Inspectorate Unit (EIU) – a department operating under Sarawak Ministry of Utilities – discovered the illicit activities. The operation had been running for quite a while and was reported to be coordinated from four shophouses that served as headquarters for the criminal cryptocurrency mining operators.

The SEB and the EIU spent two days cracking down on the locations, which were found to be situated in Jalan Tun Ahmad Zaidi Adruce, Jalan Pahlawan, and Jalan Tunku Abdul Rahman.

According to a report released by the Electrical Inspectorate Unit, Malaysian officials believed that the deviant crypto miners masked their operation by bypassing the energy meters installed in the power firm to measure electricity consumption. The report provided further explanations:

“It was found that unsafe direct tapping cables from the main incoming supply were hidden in the gypsum ceiling that were connected straight to the electrical appliances, bypassing the meter and avoiding actual electricity consumption measurements.”

Malaysian police reported that all 5 crypto mining premises generated RM 250,000 worth of electricity per month, which translates to roughly $59,000.

However, the add-up of the monthly electricity bills for all 5 shophouses amounted to approximately $215 per month, suggesting that the crypto mining operators were also cheating local energy meters in order to cover up their main electricity theft operation.

According to Malay Mail, the crypto operators had been conducting electricity theft for quite some time, with the EIU and SEB tracking and investigating them since 2018. Over this 2-year gap, 50 electricity theft cases originating from these crypto mining operators had been uncovered.

The cryptocurrency mining operators and their criminal cases are currently pending prosecution by Sarawak State Attorney-General’s Chambers.

Illegal Crypto Mining Farm in Kyrgyzstan

Recently, another illegal cryptocurrency mining farm trying to gain electricity supply through illicit means was also uncovered.

This mining operation was discovered to be run in Kyrgyzstan, on the territory of Bishkek Free Economic Zone. The mining farm was set up there purposely to take advantage of the cheap electricity offered by the country.

US National Lab Computer Scientists Deploy Artificial Intelligence (AI) to Thwart Illegal Crypto Mining

Computer scientists at Los Alamos National Laboratory have created an innovative artificial intelligence (AI) system capable of identifying malicious codes that prompt supercomputers to mine cryptocurrencies like Monero and Bitcoin.

The lab operating under the United States Department of Energy hopes to put an end to cryptocurrency cybercrime.

Software-based watchdog

Hackers are continuously wreaking havoc globally, and the crypto mining arena hasn’t been spared. Gopinath Chennupati, a researcher at Los Alamos National Laboratory, noted that the deep learning AI model will be instrumental in detecting supercomputer hacks that usually instigate cryptocurrency mining. Speaking on behalf of his team’s AI project designed to combat illegal crypto mining on the internet, Chennupati said:

“Based on recent computer break-ins in Europe and elsewhere, this type of software watchdog will soon be crucial to prevent cryptocurrency miners from hacking into high-performance computing facilities and stealing precious computing resources.”

Valid cryptocurrency miners usually assemble vast computer arrays needed to dig up digital assets. Nevertheless, crafty ones usually manipulate supercomputers by making sure that their tracks are hidden.

The new artificial intelligence algorithm is coded in such a way that it can detect crypto miners who steal computing power from research supercomputers.

AI-centered analysis

The researchers gave the system the green-light after comparing an invasive Bitcoin (BTC) mining code with a known benign code.

The AI analysis provided by the lab researchers at Los Alamos National Laboratory was more reliable and faster than conventional ones because the AI algorithm is based on graph comparisons. As a result, it cannot be fooled by common methods employed by illegal crypto miners to conceal their illicit activities on the web. These strategies include the release of obfuscated comments and variables used to disguise the codes as legitimate programming.

The system, therefore, seeks to avert the illicit cryptocurrency mining headache by identifying any foul play.

Cybercrime in a rising digital world

Cybercrime is on the rise, and alternatives such as artificial intelligence are being continuously researched during these times to regulate cybercrime.

Earlier this month, Federal authorities unraveled a huge illegal Bitcoin mining farm in Kyrgyzstan operated by government officials.

Another instance of illicit activities that are Bitcoin-driven is the illegal BTC mining activities that were uncovered by Chinese police in June. Scammers operated by digging two graves for the purpose of driving forward their illegal mining operations and were stealing electricity from a Chinese oil field company.

DoJ Charges BitClub Promoter for Role in $722 Million Crypto Fraud Scheme

A Californian man has pleaded guilty for his involvement in perpetrating BitClub Network, a cryptocurrency mining scheme estimated to have generated at least $722 million.

BitClub promoter charged with fraud

Joseph Frank Abel pleaded guilty for conspiracy in fraud, and for offering and selling unregistered securities through BitClub Network. The US Department of Justice (DoJ) also charged Abel for subscribing to a false tax return in 2017, allegedly failing to report $1 million worth of earned cryptocurrency. Along with Abel, four other of his accomplices were indicted for their roles in the BitClub Network.

BitClub Network is a fraudulent crypto mining scheme that solicited money from investors in exchange for shares in purported cryptocurrency mining pools. Investors were promised rewards for recruiting new members to the network. The Ponzi scheme was in effect for 5 years, from April 2014 to December 2019 before being shut down. It generated at least $722 million and was advertised digitally by Abel, who was a big-shot promoter for the fraudulent crypto mining network. Based in the US, BitClub Network membership was also marketed throughout Asia, Africa, and Europe.

Through a video conference with the US District Judge Claire C. Cecchi, Abel confessed to soliciting investors and taking their money in exchange for promised shares in BitClub’s crypto mining pools. According to an Internal Revenue Service (IRS) announcement released yesterday, Abel also advised other American investors to use a virtual private network (VPN) to conceal their US-based IP addresses, in an effort to prevent detection from US law enforcement.

The former BitClub promoter is now awaiting his sentencing, set for January 2021. Abel has been fined $250,000 by US regulators and now faces up to five years in prison. As for the tax evasion charge, the fraud count stipulates a maximum penalty of three years of imprisonment and a fine of $100,000.

Ponzi schemes generate billions

Similar cryptocurrency Ponzi schemes that have also been condemned by the DoJ as fraudulent investment scams have generated billions before being shut down. Some of the biggest crypto schemes include OneCoin and BitConnect, which have respectively generated $4 billion and $2.6 billion through money laundering and bank fraud.

Recently, the US Department of Justice sought to reclaim approximately $400 million dollars in a forfeiture money judgment submitted on Monday. Mark Scott, the former attorney for OneCoin founder Ruja Ignatova, was found guilty of money laundering and bank fraud in the multi-billion dollar Ponzi scheme. Currently, law enforcement is asking the US District Court of New York judge to freeze Scott’s assets to recuperate some of the laundered funds. The former lawyer faces disbarment as well.