June 9, 2014

US Researcher Caught Mining for Bitcoins on NSF Iron

Tiffany Trader
bitcoin graphic

The National Science Foundation has banned a researcher for using agency-funded supercomputers to mine bitcoins, a virtual currency that can be converted into traditional currencies through exchange markets. According to a recently surfaced report from the National Science Foundation Office of the Inspector General, the NSF banned the unnamed researcher after receiving reports that NSF systems at two universities had been used for personal gain.

Bitcoin mining refers to how the virtual currency is generated. Miners solve math problems that serve to verify bitcoin transactions. In exchange they are issued a certain number of bitcoins as a reward.

“The researcher misused over $150,000 in NSF-supported computer usage at two universities to generate bitcoins valued between $8,000 and $10,000,” according to the March 2014 Semi Annual Report to Congress. “Both universities determined that this was an unauthorized use of their IT systems. The researcher asserted that he was conducting tests on the computers, but neither university had authorized him to conduct such tests — 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.”

This is the latest case of university systems being commandeered to mine for digital currency. Other notable incidents involve a researcher at Harvard and a student at Imperial College London.

The audacity of the crime is not the only disturbing element. Bitcoin mining and research supercomputers are a complete mismatch from a resource standpoint.

“Using a Supercomputer to mine for bitcoin is both appalling and shocking to common sense,” opines Brian Cohen at Bitcoin Magazine. Cohen goes on to describe the likely economics of the situation. The breach may have netted the perpetrator $8 to $10 thousand worth of bitcoins, but the electricity cost to run the machines was likely ten to 20 times that amount.

Today’s bitcoin mining rigs employ far more specialized hardware than a PC or even a supercomputer, as this statement from Michael B. Taylor, a professor at the University of California, San Diego, attests to:

“Today, all of the machines dedicated to mining Bitcoin have a computing power about 58,600 times the capacity of the United States government’s [second] mightiest supercomputer, the IBM Sequoia,” says Taylor. “The computing capacity of the Bitcoin network has grown by around 1,300 percent since the beginning of the year.”

The virtual currency system was set up this way. When bitcoins first came on the scene, they were pretty easy to generate, but the more bitcoins there are, the harder and harder they are to mine.

The researcher, who has not been identified, had his account suspended government-wide and access to all NSF-funded supercomputer resources was terminated.