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Illegal mining has always been one of the questions, which mostly puzzled investors. There have been numerous ways to conduct illegal mining and this year there have been many crackdowns on small and large-scale illegal mining activities. In April, the South Korean police busted a facility, which was using very cheap electricity to score massive profits.

South Korea has the policy to offer factories and chicken farms cheaper electricity. This is mainly due to the wish of the government to aid struggling industries and support innovative initiatives. Needless to say, the government is very strict with in monitoring the usage of electricity.

The police raid in the Gyeong-ki province, which is the second largest region after Seoul, disclosed that the group of 5 who are still in custody, rented out the factories and farms purposely in order to make use of the protected policies for cheaper electricity. This was easily accomplished when the buildings were disgusted as semi-conductor factories and chicken farms. Farming Bitcoin and Ethereum came at nearly no cost, except for the ASIC miners which were purchased.

Illegal mining is almost priceless, for now

The group managed to rent a 870 square meter building and filed an application to the government for a semi-conductor factory. The space in the Paju restricted development area was used for 8 months. During this time the group put more than 1500 ASIC miners to use. With the vast income, the group felt the need to grow and by the 8th month they already had more than 40 other accomplices, which used the groups ASIC miners to produce even more.

Just from renting out the ASIC miners, the total “earnings” are projected to be around $300 000. These funds were only acquired, after the group decided to expand. The real amount of cryptocurrency, which were acquired during the 8-month period is still unknown.

Police investigations show that the ASIC miners managed to produce at least 760, which is more than $500 000 and an unknown amount of bitcoin. Further investigations are still required to calculate exactly how much crypto was mined. By taking into account the money, which was paid for electricity, it’s safe to say that the group used around 50% and received additional discounts for renting out the buildings.

The South Korean laws approve of a punishment, but since the type of crime is new, it probably wouldn’t be major. To prevent such future cases, the Ministry of Land, Transport and Maritime Affairs is already drafting laws to approve a harsher punishment and prohibit such areas from being exploited by illegal mining.

Such events aren’t only occurring in South Korea. Earlier this year, New York authorities subjected a crypto mining facility to a harsh check.  This was done after Plattsburgh residents, filed a formal complaint because of the excessive use of cheap electricity by the local crypto miners.

Illegal mining is a tricky subject when it comes to law

Plattsburgh didn’t entirely ban crypo, but instead issued a moratorium explaining why the city will not consider crypto mining applications for at least 1 year. The city can potentially charge around $1000/day for miners willing to use the city’s low cost electricity.

When we look around the world, it’s easy to spot why abuse of illegal mining is conducted in countries like South Korea. The higher the price, the bigger reason to seek alternative means of mining.


In the future, there probably will be sort of global agreement on illegal mining activities, but until then all countries which feel exploitable by illegal mining, must reshape their own laws accordingly.

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About Ian Karamanov

Based in Sofia, Bulgaria. Writing about cryptocurrency, politics, finance and esports. Keen interest in unedited history, spirituality and freedom.

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