Editor's note: Article updated to include the translation of the report in Chinese. Some Bitcoin miners have been busted for stealing electricity according to a public statement by police in Ma'anshan, a mining town in China. Very few details are provided except to state that 74 bitcoin…
Editor’s note: Article updated to include the translation of the report in Chinese.
Some Bitcoin miners have been busted for stealing electricity according to a public statement by police in Ma’anshan, a mining town in China. Very few details are provided except to state that 74 bitcoin mining units have been seized, coinciding with a small fall in difficulty of around 1.63% on June the 8th.
The roughly translated public post states:
After one month’s work, on June the 1st, while everyone was celebrating national children’s day, a TangXi police team, accompanied by the electricity company, struck fast. Attacked 3 places where bitcoin electricity theft was hiding. The policeman took away 74 mining machines. This operation is a solid move against electricity stealing crimes.
This is the second known case of Chinese bitcoin miners stealing electricity. Last year, 200 bitcoin mining rigs were seized following investigation by Ma’anshan’s power companies and police after reports from the public suggested possible stealing behavior. The investigation found that an ordinary looking house in the mining town was being used as a small mining farm without paying for electricity to such extent that it amounts to a “serious stealing behavior.”
Stealing electricity itself is an imprisonable crime in China, with punishment extending to years and, in exceptional cases, even life imprisonment. But, sometimes, even mining rigs are a product of theft. In December last year four Chinese suspects stole 136 S7 and S5 mining equipment worth at the time almost $250,000.
Ma’anshan Nanjing police investigation led to one suspect, Yang Moumou, who confessed to the crime and showed the police where the equipment was hiding. He stated that after hiring three other collaborators, they went by car outside the walls of a mining farm and, after drilling a hole through the wall, took the equipment to a nearby van, eventually transporting them to a hiding place. The equipment has been returned to their rightful owners.
China now dominates bitcoin mining with one of the few western miners, KNC, declaring bankruptcy recently. The zero sum activity can be a risky business as natural disasters, such as flooding, fire, or earthquakes, can make equipments worth millions of dollars very much useless.
Even when all is fine, mining is a constant race to stay ahead of the ever increasing difficulty which has now more than tripled since November 2015, in effect reducing bitcoin rewards for equipments used at the time by 75%. The remaining 25% will again be halved in just a few days, making most of mining rigs in use just a few months ago pretty much worthless.
These pressures have created a constant race to remain ahead with the latest example, AsicBoost, which increases mining efficiency by 20%, just recently released in new mining gear. Therefore, difficulty is likely to continue increasing as other miners try and catch-up with some of them, probably, getting out of the race.
The brutality of the mining business is illustrated by the fact that almost all current mining pools and farms are relatively new, with Ghash, which once controlled more than 50% of bitcoin’s hashrate just two years ago, now having an insignificant share, as well as BTC Guild, which too once controlled more than 50%, now closed down.
However, the current huge mining farms, such as Bitmain and Bitfury, seem profitable, having announced this year a number of investments in new start-ups as well as donations, but for how long that will continue is difficult to predict as the numerous factors that make mining profitable can suddenly change and send big mining farms, such as KNC, under.
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Last modified: January 25, 2020 11:51 PM UTC