Illustration of electricity thieves: Resource-based cities are prone to stealing electricity for mining

In the industrial chain of encrypted digital currency, mining is an upstream industry and was once the most profitable field.

Countless young people who dream of getting rich quickly, stimulated and attracted by the fortunes of the old people, have thrown themselves into the mining business without hesitation.

However, mining has long passed the stage where retail investors can make money.

Hard times for individual miners

Mining is the primary market for cryptocurrencies such as Bitcoin, and is also the upstream industry of the entire industrial chain. Transactions of cryptocurrencies such as Bitcoin need to be processed and confirmed by miners, and then recorded on the blockchain to form new blocks. After the accounting is completed, the system will give miners a certain amount of cryptocurrency rewards to complete the issuance of cryptocurrency.

In the early days, cryptocurrency mining could be done on ordinary personal computers. However, as the computing power of the blockchain network increased, the difficulty of mining also increased. Conventional graphics cards could no longer meet the mining needs, and high-computing ASIC professional mining machines became a must-have for miners.

In order to obtain higher mining profits, miners began to pursue more efficient mining machines. As a result, mining machines with higher computing power and lower energy consumption were continuously developed and put on the market by mining machine manufacturers to meet mining needs. The emergence of a large number of new mining machines further increased the difficulty of mining, making miners look forward to more efficient mining machines.

As a result, miners seem to be caught up in an endless "equipment race".

In this process, mining machine manufacturers such as Bitmain, Canaan Technology, and Ebang International have stood at the top of the food chain of the cryptocurrency industry chain.

The mining industry has also developed into a capital-intensive activity. The era when everyone can participate is over. As mining pools and mining farms become popular, the living space of individual miners is constantly squeezed and it is almost unsustainable.

On May 12, 2020, the Bitcoin network completed its third halving, with the reward per block reduced from 12.5 bitcoins to 6.25. With the price of the coin and the mining cost basically unchanged, the halving means that miners' income is cut in half and the payback period of mining machines doubles. At the same time, the halving has accelerated the replacement of mining equipment, and a large number of mining machines with poor performance are approaching the shutdown price and are eventually eliminated. The days of small mines and individual miners who cannot update their mining machines have become more difficult.

When the cost of mining machines cannot be reduced in the short term, cheap electricity resources become more important. Of course, electricity prices are always the vane of the mining industry and one of the biggest expenses for miners.

Just like migratory birds, miners have always been a mobile army that migrates with the price of electricity. In order to get low electricity prices, miners are willing to travel long distances to foreign countries. For individual miners who are unable to migrate, stealing electricity is a more direct choice.

The trend of electricity theft and Bitcoin price is highly consistent

Cases of miners, especially individual miners, stealing electricity to mine occur frequently across China.

As of June 10, 2020, a total of 1,278 documents were retrieved by searching the keyword "Bitcoin" on the China Judgments Online website. Among them, 70 cases were related to theft of electricity for mining, accounting for 5.48% of the total number of related cases.

Data source: China Judgment Documents Network, 01 Blockchain

Cases of electricity theft for Bitcoin mining increased year by year before 2019. According to incomplete statistics, the number of cases of electricity theft for Bitcoin mining in China from 2015 to 2019 were 4, 16, 19, 26, and 5, respectively.

Data source: China Judgment Documents Network, 01 Blockchain

Starting in 2016, the price of Bitcoin began to rise, triggering the first wave of electricity theft. By the end of 2017 and the beginning of 2018, the price of Bitcoin skyrocketed, and the "underground miners" were like mice that smelled cheese, ready to move again, and the number of Bitcoin theft and electricity mining crimes rose rapidly. By 2019, the price of cryptocurrency remained at a low level, and the number of crimes involving theft and electricity mining also dropped significantly.

From the time dimension, it can be seen that the trend of stealing electricity for mining is highly consistent with the price trend of cryptocurrencies such as Bitcoin. When the price is at a high level or in an upward channel, the behavior of stealing electricity for mining is more rampant; when the market is quiet and the price of the currency is falling, the frequency of stealing electricity for mining will also be significantly reduced.

Resource-based cities such as Daqing and Ma'anshan are prone to stealing electricity for mining

Judging from the regional distribution of related cases in the past five years, resource-based cities such as Daqing City in Heilongjiang Province, Ma'anshan City in Anhui Province, Datong City in Shanxi Province and Tangshan City in Hebei Province are high-incidence areas for theft of electricity for mining of cryptocurrencies such as Bitcoin. Among them, the most cases of theft of electricity for mining occurred in Heilongjiang Province and Anhui Province.

These high-incidence areas are either rich in oil resources or rich in mineral resources such as coal. They are resource-intensive and use huge amounts of electricity. In addition, resource development sites are generally located in remote areas, making it easier for electricity theft gangs to succeed.

Taking Daqing City in Heilongjiang Province as an example, most oil fields are scattered in remote areas and lack supervision. The perpetrators are mostly workers of the operating team or idle people living near the operating team. Their modus operandi is mostly to privately connect cables to the oil well transformers of the operating team.

Data source: China Judgment Documents Network, 01 Blockchain

Various "techniques" for stealing electricity

Stealing electricity for mining is not a trivial matter that can be done casually.

In addition to the location, the method is also very important. As a result, a variety of "techniques" of stealing electricity are presented to the world.

The most common methods are privately connecting cables, modifying electric meters, and installing jammers at remote transformers. Vegetable cellars, Internet cafes, bath centers, schools, companies, and even graves are possible crime scenes. People from all walks of life, including school principals, company employees, and waste recycling operators, are involved.

(1) Using oil field electricity to mine

On May 26, 2020, the police in Daqing, Heilongjiang Province suspected that there was a power theft den near a village based on the power data provided by the oil field. After investigation, two "graves" without owners or tombstones attracted the attention of the police. Because there was a pile of firewood not far from the "graves". Logically, there should be villagers living near the firewood pile, and it was very unusual to see it in the woods near the graves.

Sure enough, under the firewood pile, the police found a tunnel entrance leading to an illegal mine under the grave. The den stole electricity from the oil field and operated more than 20 Bitcoin mining machines.

(2) The principal and vice principal joined forces to secretly mine in the school computer room

In 2018, the electricity bill of a middle school in Chenzhou, Hunan Province, soared in recent months, and the network of the whole school became very slow. After investigation, the teachers found 9 high-power computers in the electronic classroom. It turned out that the principal and the vice principal of the school were mining in the classroom. They specially set up 9 machines to mine Ethereum in the school computer room, 8 of which belonged to the principal and 1 to the vice principal. The electricity bill of more than 10,000 yuan was reimbursed by the school.

Nine high-power "mining machines" running day and night not only brought down the school network, but also made the school's circuits unable to bear the load, almost causing a fire.

In October 2018, the school principal was removed from his post and the vice-principal was given a party warning.

(3) Secretly install mining software and use computers in Internet cafes to mine

Starting from May 2018, Wu and Deng conspired, with Wu providing modified "mining" software. Taking advantage of Deng's position as a technician at an Internet technology company in Huadu District, Deng secretly installed the "mining" software on the servers of two Internet cafes that he was responsible for managing and maintaining. As long as the computers in the Internet cafes were turned on, the "mining" software would automatically run. The two collected profits through an account applied for on the BitGo website, with every 10,000 mines equal to a value of RMB 20. The account would automatically transfer the "mining" income into the wallet.

By the time Deng and Wu were arrested by the public security authorities, they had made a total of more than 60,000 yuan in illegal profits. The long-term operation of the "mining" software on the computers caused the hardware of the Internet cafe's computers to wear out, and led to a significant increase in the electricity bill of the Internet cafe. Their behavior constituted the crime of destroying computer information systems.

(4) Hidden scripts to steal corporate computing power for mining

An, who has been working at Baidu for one year and three months, is an employee of Baidu's search operation and maintenance department and has the authority to operate Baidu's search server.

On the MacBook provided by the company, he used the iterm software to control all the company's server control machines. With the help of this software, he uploaded the mining script through the control machine and asked the server to download the mining script in batches. In this way, Baidu's computing power was used by An for mining.

Through the script, An uploaded Baidu's computing resources to the hash website. The hash website mined Monero through the computing resources uploaded by him, and finally settled the account with him in Bitcoin according to the amount of computing resources uploaded by him.

Then, An withdrew the bitcoins from the hash website to the otcbtc website, and cashed out some of the bitcoins through this website, and then the people who bought his bitcoins transferred the money to his Alipay account. In this way, An made hundreds of thousands of yuan in profit in a few months.

After the incident was exposed, An was sentenced to three years in prison.

Electricity theft harms others and yourself, mining requires caution

Every person who steals electricity to mine has a dream of becoming rich overnight, regardless of the cost. They come up with all kinds of ideas and try to do it without anyone noticing, with countless "inspirations" flashing in their minds. However, the law is strict and no one can escape it, and in the end, they can only end up with a hasty "see you at the police station".

In recent years, the national electricity supply and demand situation has been tense, and the load and power consumption of power rationing have increased to varying degrees. At the same time, the phenomenon of power theft has also intensified, and the country suffers serious losses every year due to the theft of power energy. According to incomplete statistics from 01 Blockchain, from July 2017 to December 2019, the direct economic losses (the value of stolen electricity) caused by the theft of electricity for Bitcoin mining reached RMB 2,267,126.6.

As the country and various regions have stepped up their crackdowns on electricity theft, many electricity theft gangs and individuals have finally been punished by law. According to Article 264 of the Criminal Law of the People's Republic of China: Those who steal a large amount of public or private property, or steal multiple times, break into homes, steal with weapons, or pickpocket shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention or public surveillance, and shall be fined or fined alone; if the amount is huge or there are other serious circumstances, they shall be sentenced to fixed-term imprisonment of not less than three years but not more than ten years, and shall be fined; if the amount is particularly huge or there are other particularly serious circumstances, they shall be sentenced to fixed-term imprisonment of not less than ten years or life imprisonment, and shall be fined or have their property confiscated.

The theft of electricity not only seriously disrupts the normal order of electricity use by residents, causes huge economic losses to power supply companies, seriously damages state-owned assets, but also poses a serious threat to the lives and property of electricity thieves and other people. Various private thefts of electricity cannot guarantee safety, and private wiring can easily cause accidents such as leakage and fire. In January 2019, two fires broke out in Jinxiu Xicheng Community, Lvyuan District, Changchun City within three days. The reason was that the owner stole electricity, and the overload caused the meter box to catch fire. Fortunately, the firefighters arrived in time to put out the fire, but it had already effectively threatened the lives and property of the owners in the same community.

Don't take risks and lose both your life and your money!