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Massive crypto mining stealing electricity

Chinese Made USD 20M With Illegal Crypto Mining Scheme – Report

Fifteen suspects were arrested in south-central China, the city of Henyang, for stealing electricity from Internet cafes to mine cryptocurrency. The scheme reportedly involved bribing nearly 9,000 computer administrators and earned c. USD 20 million during the period of 24 months, reports Chinese local news outlet CCTV.

The suspected gang operated as advertising and value-added business with a hidden crypto mining activity. The company’s head with a surname Zhang used to approach internet cafe administrators privately and asked them to install his company’s miningware in return for a share of mining profits, according to the report. The scheme allegedly ran from June 2017 to July 2019.

Reportedly, Zhang is a computer science graduate who discovered “hot” cryptocurrency market at the end of 2016.

Russian officials maintain that these miners are committed to legitimate economic activities, even though they continue to pay residential rates for the power they consume. Costs in remote regions of Irkutsk begin at just $0.01 per kilowatt-hour, which is roughly 4 times less than industrial tariffs.

Furthermore, the number of instances involving mining rig stealing is also on the rising trend.

Three hundred forty-four similar incidents were reported in the area in 2021. The total loss was 160M rubles (over $2.1M). Thus far, fifty-four cases have been handled, with sixty-six criminals being taken to trial.

US$25,893.46 (RM108,623) in cryptocurrencies, including Bitcoin and Ethereum.

Azam said the operations also saw the seizure of five luxury vehicles, including a BMW, Honda Accord, Toyota Vellfire, and Audi.

“TNB has confirmed that there were offers of between RM3,000 and RM300,000 (to technicians) to avoid enforcement and leak information on operations,” he said.

“Intelligence gathered by MACC shows that it (electricity theft) is happening nationwide.”

Azam said the operations succeeded due to strategic cooperation with TNB.

He said between 2018 and 2001, TNB’s data showed the utility company had made RM2.3 billion in losses with 7,209 cases of electricity theft related to mining cryptocurrency.

Azam stressed that while mining the digital currency was not illegal in Malaysia, the stealing of electricity to avoid normal tariffs is a crime.

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Electricity distributors in the Russian province of Irkutsk have seen increased home electricity usage that they attribute to cryptocurrency mining.
Planes carrying banned Chinese mining machines keep landing in the area, and incidences of gear stealing have considerably surged.

Irkutsk Faces Increasing Electricity Demands

Companies ensuring the electricity supply in the Russian area of Irkutsk have recorded a 4-fold rise in household usage in 2021 compared to the last year, accusing rookie cryptocurrency miners of the surge.

Ukraine’s state security service announced on Thursday that it had discovered the country’s biggest illegal mining facility to date in the city of Vinnytsya.

It was stealing enough electricity to cause blackouts in multiple city areas. According to preliminary estimates, the amount of weekly damages could reach 7 million hryvnias (about $256,500).

The farm was located in one of the former warehouse buildings of a local energy company.

According to the investigation, it was set up by miners from Kyiv and Vinnytsya.

They tempered with electricity meter data in order to conceal their illegal activities.

3,800 gaming consoles, more than 500 GPUs, 50 CPUs as well as incriminatory documents relevant to electricity theft have all been confiscated.

The law enforcement officials opened criminal proceedings under article No.

According to Andrey Zhdanov, the head of the Irkutsk Regional Criminal Investigation Department, such felonies were perpetrated frequently in 2021.

Russia and Mining

Because the Chinese authorities initiated a national drive on cryptocurrency mining, Russia’s role as a mining hub has grown substantially. According to the Cambridge Center for Alternative Finance report, by the end of 2021, Russia’s portion of the worldwide BTC hash rate had surpassed eleven.

In Russia, cryptocurrency mining is a lucrative industry that also provides an extra source of cash flow for several regular Russians.

Its regulatory identity is unknown, but several politicians in Moscow support the notion of classifying it as a business activity, allowing the state to tax it and boost power costs for mining corporations and private miners.

According to Tass, Evgeny Vechkanov, Irkutsk Electric Grid Company’s Director for development, cited high cryptocurrency costs and the banning of cryptocurrency mining in China as the key factors.

The development is primarily due to “grey” mining, according to Oleg Prichko, the Baikal Energy Company’s CEO. He claimed that 7 Boeing-737s laden with cryptocurrency minting equipment landed in Irkutsk merely during the first half of January, remarking on the growth.

Due to the embargo, several trucks deliver machinery from China that isn’t required there. Prichko went on to say that “virtually free material move to the Irkutsk area.

Several Irkutsk locals have established mining fields at their residences and dachas, according to the statement.
The electricity grid is increasingly overburdened, resulting in frequent outages and burnouts.

After reaching a consensus on mining with his partners, soon he and his team developed the mining software.

While the investigation is still ongoing, illegal stealing of electricity to mine cryptocurrencies is nothing new. For instance, last month in Ukraine, South Ukraine Nuclear Power Plant employees were caught connecting the power plant to the internet in order to mine cryptocurrencies, as reported by ZDNet.com.

Besides, the Ukrainian Secret Service also seized additional mining equipment from the National Guard units barracks, who were meant to guard the power plant.

In a similar case from 2018, scientists from the Russian nuclear center were arrested for using the nuclear plant’s supercomputer to mine crypto.

The theft of electricity is a criminal offense in the country under Section 33 (5) of the Sarawak Electricity Ordinance. If found guilty, the suspects could pay a fine of RM 100,000 ($23,832.23) and/or sentenced to a five-year jail term.

Since 2018, Malaysian authorities have been cracking down on illicit crypto mining operations due to the increased electricity theft in the country.

In a similar development, Coinfomania reported that a joint task effort between the Malaysian Energy Consumption and the Tenaga Nasional Bhd (TNB) raided two illegal crypto mining facilities on the grounds of electricity theft.

Suppose an average family of three consumes 6 kilowatt-hours of electricity per day, the 6,890 bitcoin mining machines confiscated could consume as much electricity as around 46,000 households consume in a day.

Prior to it, around 4,000 bitcoin-mining machines hidden in 12 hideouts in Zhenjiang in China’s eastern province of Jiangsu province have been confiscated by police this July. Investigators said they found the computers after getting a tip from a local power company about abnormal electricity usage in the area.

China is a known crypto mining giant, reportedly wielding 66% of global bitcoin hash rate despite its rigid stance towards cryptocurrencies.
Many bitcoin mining farms are based in China due to the massive surplus of cheap electricity especially the abundant hydropower in southwestern China.

Crypto mining is not ruled illegal in the country.

Police in Hebei, a province in Northern China, have seized 6,890 bitcoin mining hardware units that were illegally used to mine cryptocurrencies, reported China Central Television (CCTV), the predominant public television broadcaster in mainland China.

According to the CCTV report, police in the country have launched a nationwide criminal investigation into electricity theft and found that using stolen electricity to power bitcoin mining rigs have been rampant over these years.

Among those efforts, police in Tangshan, Hebei province, have so far seized 52 high-power transformers and 6,890 bitcoin mining machines in a local investigation started from last April, which has led to multi-million dollar worth energy losses.

According to the police, a single bitcoin mining machine operating around the clock can consume up to 40 kWh in a day.

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