Crypto mining is one of the world’s largest sources of energy consumption. Typically, you pay money for electricity, and this is an accepted cost of mining. But you can make even more money through crypto mining when you steal electricity – and that’s what people around the world have started to do.
Approximately $90 billion worth of energy is stolen worldwide every year. Some of the worst offenders include Brazil, India, and Russia.
In first world countries, energy theft is typically linked to illicit activities – like indoor marijuana grow operations.
Over the last few years, however, these countries have seen a shift. The amount of electricity theft related to crypto mining is increasing significantly.
As pointed out by The Next Web, the Netherlands has seen a 20% increase in non-weed farm-related electricity fraud cases over the past five years.
“Among them is a new group of electricity thieves posing a challenge for police and distribution network operators: bitcoin miners. In contrast to weed farms where the lights don’t need to be on night and day, bitcoin miners can keep mining bitcoin — and drain energy — 24/7.”
To combat bitcoin mining operations, power grid operators need to use new tools and analysis systems. The Next Web highlighted some of the methods used by power grid operators to combat electricity theft related to bitcoin mining.
Bitcoin Mining is Legal – If You Pay Your Bills
First, it’s important to note that bitcoin mining is legal in most countries. Unlike an indoor marijuana grow operation, you don’t need to take steps to hide your electricity usage. You can run a bitcoin mining farm and, as long as you pay your bills, you have nothing to worry about.
Where bitcoin miners get into trouble is in places like Europe, home to some of the highest electricity prices in the world. Bitcoin mining typically isn’t profitable in Europe due to high electricity prices.
That’s why some European bitcoin miners are turning to energy fraud to boost their bottom lines. By stealing electricity, you can remove your biggest expense from the operation.
One system manager in the Netherlands, for example, got fired after his boss discovered a bitcoin mine he had secretly installed in the company’s server room.
Overall, energy is the biggest expense with bitcoin mining. A bitcoin miner can expect to spend approximately half of their profits on their energy bill.
What Happens If Caught?
The Next Web highlighted how law enforcement in the Netherlands is dealing with bitcoin mining.
In the Netherlands, electricity thieves just have to pay the energy provider the price for the extra electricity they used. This can lead to electricity thieves paying less than ordinary consumers.
The police will look through the owner’s mobile device and examine other evidence to determine how long the bitcoin mine was running. They’ll check how many machines were running, for example, and how long you’ve been stealing electricity.
Ultimately, the majority of bitcoin mining operations that steal electricity occur under the radar, making it difficult for police to find proof – and bring energy thieves to justice.
Bitcoin Mines Running Stolen Electricity Can Be Dangerous
There’s another danger of bitcoin mines that use stolen electricity: they can be life-threatening environments.
“In terms of public safety, electricity fraud is an even bigger problem,” explains The Next Web. “Poorly connected live cables in bitcoin mines — just like weed farms — could be highly inflammable, creating life-threatening situations. Cables and sockets can easily burn out when the machines they are connected to — like bitcoin mines or fans cooling the servers — require more energy than they can handle.”
You may remember the story of one crafty bitcoin miner who rigged his server farm to his home’s water heating system, allowing him to heat his bathwater using the dissipated heat from his bitcoin servers. The system was so effective that his machines had to be periodically turned off when the water reached a near-boiling temperature.
How Do Police Find Illicit Bitcoin Mining Farms?
Police are using a number of different strategies to find illicit bitcoin mining farms. Many of these strategies have been carried over from weed farm detection processes. In fact, The Next Web highlighted one story from the Netherlands where police raided a building expecting to find an illegal weed farm – only to find a bitcoin mine instead.
Inexplicable heat and electricity problems in the neighborhood are one of the first signs of an illicit bitcoin mining problem. Residents might call police and report that their walls felt strangely hot, for example, or that their lights were flickering.
Neighbors are encouraged to report these problems. After all, if the bitcoin farm next door goes up in flames, then it can quickly spread to all surrounding buildings.
Police are also reportedly using big data and AI. Researchers at the University of Luxembourg, for example, recently developed an algorithm that tracked the energy usage of 3.6 million Brazilian households over a 5 year period. The algorithm identified properties with suspiciously low energy usage. Then, regulators can individually check on these properties.
Ultimately, statistics show that the bitcoin network accounts for 0.5% of the world’s entire energy usage. That’s equivalent to the entire energy intake of a country like Ireland. Keep in mind that this is just bitcoin mining and it’s just an estimate – the full energy impact of the crypto industry might be even higher.
Most bitcoin mining is legal. Bitcoin miners pay their electricity bills just like anyone else. For miners seeking to maximize profit at the expense of risk, however, stealing energy presents a lucrative opportunity.
For more on how law enforcement is tracking illicit bitcoin mining activities worldwide, read the full article from The Next Web here.