Russian Bitcoin Miner Fined $7,000 for Running an Illegal Operation

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Denis Baykov, a Russian man who recently worked at a nuclear warhead facility owned by the government, has been fined by the authorities for running an illegal Bitcoin mining operation at his place of work. 

According to an announcement from a Russian court last week, Baykov and two other employees were caught last February while attempting to mine Bitcoin at the All-Russian Scientific Research Institute of Experimental Physics in Sarov, Nizhny Novgorod Region, a Stalin-era nuclear facility where the first atomic warhead for the Soviet Union was reported to have been developed. 

Gunning for the big fish

Reports revealed that the men were apprehended last year while trying to mine Bitcoin with the use of a computer in the facility. They were accused of violating their employee rights by trying to take advantage of certain benefits, including an abundance of electricity and the facility’s supercomputer; which, according to multiple reports, was powered by a system running on one petaflop (the equivalent of 1,000 trillion transactions per second). 

The facility is generally kept locked up, or within restricted access for members of the public. Apart from solid fencing around it, the facility is also put under a strict 24-hour guard. 

In addition to exploiting their access, Baykov and his accomplices, who were initially hired to help maintain the facility, were also accused of illegally gaining access to the supercomputer and violating the facility’s regulations concerning the storage of information. Tatyana Zalesskaya, a spokesperson for the institute, told Russian news outlet RBC that criminals illegally used “official computing power for personal purposes, including for the so-called mining.”

For his crimes, Baykov has now been fined 450,000 rubles (about $7,000). Russian media house Meduza also revealed that the two other men are currently awaiting their sentencing. 

Miners and nuclear facilities

The use of government facilities in mining operations is barely new. It has more or less become commonplace. Back in August, a report from UNAIN revealed that the Security Service of Ukraine (SBU), the top counterintelligence agency in the country, busted an illegal mining facility. Per the report, the operators were arrested at a nuclear power plant located at Yuzhnoukrainsk. The men reportedly needed to get an Internet connection to run their gear, and in getting their connection, they compromised the general security of the plant. 

On the same day, a branch of the Ukrainian National Guard discovered more mining equipment in the plant. After a search, officials reportedly discovered seven hard drives, two solid-state drives, 17 GPU video cards, and a router. The entire rationale for this isn’t so difficult to decipher. If there is one thing that nuclear plants and cryptocurrency mining have in common, it is their toll on available electricity. Essentially, these facilities present the perfect hideout for anyone who wants to mine cryptocurrency illegally and anonymously.

There is also an abundance of electricity that these mining facilities get. The Ukrainian facility was a state secret, so all electricity-related activities going on there would have been protected by the state and barely investigated.

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About Jimmy Aki

Jimmy has been following the development of blockchain for several years, and he is optimistic about its potential to democratize the financial system.