AFP raid Bureau of Meteorology over cryptocurrency investigation

Ross Greenwood speaks with Dr Christopher Berg from RMIT’s Blockchain Innovation Hub about why Bureau of Meteorology employees would use BoM’s high-powered computers to mine cryptocurrencies.

Introduction: AFP raid Bureau of Meteorology over cryptocurrency investigation

Ross Greenwood:  We often talk to you about Bitcoin and just the way in which Bitcoin is acquired. Now obviously, you can go and buy it through an exchange or alternatively you can go and mine for it. Now mining for Bitcoin means you’ve actually got to delve deeply into the internet, you’ve actually got to go through a whole lot of programs to try and uncover the Bitcoin. It can take enormous processing power and also enormous amounts of electricity. What happened today is Australian Federal police have raided, of all places, the Bureau of Meteorology.

Two employees of the Bureau of Meteorology are now being investigated for using the Bureau of Meteorology’s powerful computers to mine for Bitcoin. It’s an astonishing story. This happened at the Collins street headquarters of BOM in Melbourne, last week. It’s just almost staggers, belief to think they would do this. Let’s go to the RMIT’s Blockchain Innovation Hub, Chris Berg is the head of that. He’s on the line right now. Many thanks for your time, Chris.

Interview with: Chris Berg, RMIT, Blockchain Innovation Hub

Chris Berg: Thank you for having me.

Ross Greenwood:  In regard to this, I do understand, obviously, to these days get new Bitcoins, you’ve really got to be able to have enormous computing power and also enormous amounts of electricity. Would the Bureau of Meteorology’s computers be those types of computers that would give you an advantage over a typical household computer?

Chris Berg: Look, it’s definitely the case that the Bureau of Meteorology has some really powerful computing power. They’ve got supercomputers, some very expensive supercomputers that can do the processing that, obviously, your or my desktops at home or our laptops can’t do. It’s not totally clear that they were using those supercomputers there. There’s been some reports that have suggested that they are.

Very well it might be, that if what is alleged has been going on, then maybe they were just exploiting the fact that well, the Bureau of Meteorology was paying the electricity, the big cost in mining Bitcoin and cryptocurrency is an electricity cost. They might have just not wanted to pay for that themselves.

Ross Greenwood:  Okay. Just explain that to me, how is the economics of mining a Bitcoin these days? Just try and break it down for me.

Chris Berg: Absolutely. Mining Bitcoin is a very competitive industry at the moment. In order to mine Bitcoin, that is to mint new Bitcoin, you have to validate all the most recent transactions on the network by solving what we call computationally difficult puzzle. That’s basically just solving a computing puzzle that you do by brute force, by testing every combination of the answer until you come to the right one. Now–

Ross Greenwood:  It’s code-breaking, isn’t it? That’s what it basically is. It’s basic code breaking, but you’ve got to go literally through every code on the lock to work out what is the right combination to undo it and ultimately discover the Bitcoin.

Chris Berg: Absolutely. Obviously, the faster your computer, the more powerful your computer is, the quicker you’re going to be able to resolve that puzzle. What’s happening these days is, people don’t tend to mine for Bitcoin by themselves, they tend to work in mining pools. You’ll dedicate some part of your processing power or your computing power to a mining pool and you get some share of the Bitcoin reward if that pool is successful.

This is probably what they’re engaged with. It’s not that hard to do, it’s not that complicated but what it really requires is cheap electricity to be profitable. Australia’s electricity, as I’m sure listeners know, it’s very expensive, it’s much better for someone to do that if another organization is picking up on that.

Ross Greenwood:  In other words, if you could say, for example, get your employer with their free electricity to pick up the Bitcoin for you, it clearly would be a whole bunch more profitable but you’d need the processing power of do it as well. Let’s say, for example, I’m prepared to spend the money on the electricity and the computing power to try and mine new Bitcoin given the fact that Bitcoin give or take is about $10,000 US at the moment, how does the economics stack up?

Chris Berg: Well, it depends on how much processing power you have at your disposal. These days, you don’t really mine Bitcoin of your own personal computer. The professional Bitcoin miners are buying specialty equipment, which itself can be many thousands of dollars. Having said that, if you successfully mine the Bitcoin by whatever luck you had, if you managed to process one of the blocks in the Bitcoin blockchain, you’ll get 12.5 Bitcoin as reward, not just one Bitcoin, but 12.5. That adds up to about $170,000 AU at the moment. We’re talking quite substantial amounts of money.

Ross Greenwood:  Okay. In other words, if you can crack the code of the blockchain and you can uncover the Bitcoin, and you say $170,000, it therefore, makes it worthwhile to be able to get the electricity to shell out for the computing power to be able to crack that code, but the problem is, obviously as you say, the price of electricity, which is why some people might simply try and get the boss’ computer, leave them on overnight and that would be economical if you can get away with it, a pretty reasonable thing to do.

Chris Berg: Well, obviously you’re also stealing electricity and the police have obviously been involved in this case. It’s all alleged, but I suspect that that’s the thing that they’re worried is happening.

Ross Greenwood:  We make the point here that this is alleged, there is an investigation being undertaken according to reports, but that is

the mechanics if you like, the economics of mining Bitcoin and why some might consider using the boss’ electricity is far more profitable than using your own. Chris Berg is with the RMIT’s Blockchain Innovation Hub. Chris, I appreciate the explanation this evening.

Chris Berg: My pleasure. Thank you.


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