Entries with tag bitcoin mining.

US Agency Investigates Bitcoin Hardware Provider

The US Federal Trade Commission is asking a federal judge to grant a preliminary injunction against Butterfly Labs, which would place the Bitcoin-mining-hardware manufacturer in a court-appointed receivership and extend a temporary restraining order filed by the agency. The injunction alleges that Butterfly Labs used customer-ordered machines to mine bitcoins before shipping them, saying the practice was part of their testing, allowing the company to pocket Bitcoins that should have gone to its customers. The FTC says it is also investigating three of the company’s directors for spending company money on personal products and services while not fulfilling orders, thereby taking what amounts to interest-free loans from customers. Butterfly Labs is currently working under a temporary restraining order. The court previously allowed the FTC to seize Butterfly Labs’ assets and close its operations before the case goes to court. (Ars Technica)(CoinDesk)

 

National Science Foundation Suspends Researcher for Misusing Supercomputing Resources for Bitcoin Mining

The US National Science Foundation (NSF) has suspended a researcher for misusing two universities’ supercomputers to mine bitcoins. Its Semiannual Report to Congress from the Office of the Inspector General<  states that the researcher mined roughly $8,000 to $10,000 worth of bitcoins via remote access using $150,000 worth of computer use on government equipment,. The universities involved stated the actions constituted unauthorized use of their networks. “Both university reports noted that the researcher accessed the computer systems remotely and may have taken steps to conceal his activities, including accessing one supercomputer through a mirror site in Europe,” noted the Inspector General’s report. The researcher claimed to have been conducting tests on the computers. The researcher is not allowed to use any NSF-funded supercomputer resources and, according to the Inspector General’s report, “In response to our recommendation, NSF suspended the researcher government-wide.” No additional details were released, including the universities involved or the researcher’s identity. “With the price of a bitcoin currently almost £400 ($679), there is certainly a strong temptation to misuse access to a powerful computer for mining,” Kadhim Shubber, a journalist with CoinDesk, a bitcoin news service, told the BBC. (SlashDot)(BBC)(CIO)(US National Science Foundation)

US Bitcoin Hardware Maker Hit with Complaints

Roughly 300 complaints have been filed with the US Federal Trade Commission against a Bitcoin hardware maker that has failed to ship product to customers. Butterfly Labs, a Kansas-based manufacturing company that provides hardware for virtual currency mining operations, has faced numerous accusations of fraud and is in federal court now with a lawsuit, having previously lost a 2013 civil suit. The complaints lodged against the company are from customers around the world, including Argentina, Canada, and Estonia, filed between September 2012 and April 2014 whose orders were never filled or else requested refunds that never materialized, according to Ars Technica. In the court documents it obtained, a Kansas federal judge told the company’s co-founder, Sonny Vleisides, “his company had a ‘strong smell’ of fraud about it during a probation hearing.” (He is on probation after entering a guilty plea in connection with a 2010 lottery scam. The judge extended his probation an additional two years.) Butterfly Labs has claimed it has experienced manufacturing delays. “In light of new details from the recently published transcript of that January 2014 probation hearing,” concluded Ars Technica, “the legitimacy of the Butterfly Labs operation could soon be decided once and for all.” The FTC merely fields complaints, acting on them as warranted, which may include and investigation and possible litigation. It does not guarantee those complaining consumers that they will receive any refund. (Ars Technica – 1)(Ars Technica – 2)

Company Conducts Industrial-Scale Bitcoin Mining

The process of bitcoin mining—the creation of new bitcoins—is intended to be computationally intensive to discourage counterfeiters from trying to manipulate the system. Some individuals have built custom computer systems for more efficient mining operations. It was only a matter of time, given the increased interest in and value of the virtual currency, that someone decided to scale up such an operation. Dave Carlson has taken this to another level by scaling up this process and creating MegaBigPower, which is now a major bitcoin-mining organization. CEO Carlson said his operation will soon account for between 7 and 10 percent of the world’s bitcoin-mining processing power. He plans to reach that goal with thousands of bitcoin-mining computing units, using 1.4 million BitFury bitcoin-mining chips managed by a tiny Raspberry Pi computer. The company spent between $3 million and $5 million for the system and is now generating between 7,000 and 8,000 bitcoin—worth between $3.1 million and $3.5 million—per month. The operation’s primary investor is the Polish nonprofit R&D organization BioInfoBank. MegaBigPower also rents capacity on its system to others interested in bitcoin mining. (SlashDot)(Ars Technica)

Skype-Based Malware Forces Computers into Bitcoin Mining

Newly discovered malware spreading via Skype is transforming infected computers into Bitcoin-mining machines. Bitcoin mining is a legitimate process in which an individual or pool of individuals exchanges time on their computer for processing Bitcoin transactions, such as certifying a transaction by finding a sequence of numbers, for Bitcoin. The malware is spreading via e-mail messages with a malicious link attached. Researchers from security vendor Kaspersky Lab say this bad link has been accessed more than 2,000 times every hour. Infected machines perform a computational task that triggers the release of Bitcoin in exchange for its completion and generate Bitcoin currency for the hacker. The more machines that do this, the more quickly the Bitcoins add up. Kaspersky researcher Dmitry Bestuzhev said he discovered most victims are located in Italy, with others in countries such as Russia, Poland, Costa Rica, and Spain. The network appears to be sending information to a command-and-control computer in Germany. The value of the virtual currency has doubled in a week, reaching $200 per Bitcoin for the first time earlier today. Reportedly, $2.3 billion in Bitcoin currency is in circulation. (BBC)(Mashable)(TechCrunch)(Kaspersky Lab Securelist)

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