County employee accused of hiding Bitcoin mining operation under the floor at work and racking up $6,000 electrical bill

Article content

A New York State county employee brings new meaning to the phrase energize your work.

Article content

The IT supervisor allegedly wove cryptocurrency mining into his workspace, draining what could turn out to be tens of thousands of dollars in energy expenses from a Long Island local government office.

Christopher Naples now faces a slew of charges, including public corruption and grand larceny that could potentially send him to jail for 15 years.

Mining for cryptocurrency, such as Bitcoin, requires networks of computers to crunch numbers, leading to exorbitant electricity costs. While miners could use one home computer to find Bitcoin in 2009 when it started, the system keeps the amount of Bitcoin production stable by making it more difficult as more miners join the industry. Now mining “rigs” require tens of thousands of dollars of investment.

Article content

Naples allegedly had some 46 machines hidden under floors, in walls and disused electrical panels at the Suffolk Country Center in Riverhead, New York. Initially, officials calculated just 10 of the machines in use since February racked up US$6,000 in electrical bills.

It’s likely the remaining units cost thousands more, Timothy Sini, the Suffolk County district attorney, told a news conference this month. Charging at the same rate would mean a total approaching US$30,000.

“We’re talking about an enormous amount of energy,” Sini said. “Not only do we have thousands of dollars of taxpayer money funding this operation, but it also put the county’s infrastructure at risk.”

Investigators became suspicious after county internet systems slowed and the office required air conditioning repairs. Mining rigs typically throw off huge amounts of heat.

Article content

The amount of energy spent globally on cryptocurrency mining is estimated at 91 terawatt-hours a year, or more than all of Finland’s consumption, according to The New York Times. That has prompted environmentalists to protest the currency’s adoption. But it also faces regulatory hurdles in many countries concerned that criminals use its trans-border fluidity to launder money while evading oversight, poor official exchange rates and traditional banking fees.

Still, some countries are attracted to Bitcoin. El Salvador this month became the first country to accept it as legal tender. Laos said this week it wants to encourage mining operations on its territory because it has a surplus of hydropower. Alberta Premier Jason Kenney has suggested similar opportunities. Traders in Vietnam, Brazil and Nigeria are using it as many in emerging economies seek to sidestep weak local currencies, inflation, inept regulation and slow banking systems.

Article content

But in developed economies, scrutiny is intensifying as the use of cryptocurrencies spreads disruption in the financial system, exposing consumers and markets to potential dangers, such as hacking, uninsured losses and swindles.

In August, hackers stole US$600 million from one cryptocurrency platform, PolyNetwork, though they eventually returned it after the company promised them a US$500,000 reward and a job. It’s unclear if the job was accepted.

The U.S. Securities and Exchange Commission has set up a special office to track cryptocurrency developments and propose regulations. Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen have expressed grave concerns about cryptocurrencies.

Article content

In Canada, multiple agencies are on the case of how to regulate or incorporate the currency, including the Bank of Canada, the National Research Council and stock exchange owner TMX Group.

Cryptocurrencies in Canada are currently treated as a securities investment, as in a stock or bond. And that has caused a crackdown on platforms that aren’t registered as traders; Binance, the world’s largest cryptocurrency exchange by volume, pulled out of Ontario in June. Alberta’s utility commission ordered one miner to shut operations because of noise complaints from neighbours.

Back in Suffolk County on the east end of Long Island, it’s unclear how much Bitcoin Naples was actually able to mint. He’s out of work, but maybe there’s a job opening at PolyNetwork.

Naples has been released on his own recognizance. That seems to be the current state of the cryptocurrency industry in general: at large pending good behaviour, but also facing suspicions.