China’s Zhejiang Busts GPU Mining Operation in Public Facilities

Authorities in China’s eastern Zhejiang province busted a mining operation that had set up graphics processing units in a publicly funded facility to mine bitcoin and ethereum, according to a WeChat post by the province’s Cyberspace Administration.

• Zhejiang launched the investigation in early September, before China’s top financial and tech watchdogs called for the gradual elimination of crypto mining. They were looking for people who were using government, Communist Party, state-owned enterprises, and research institutions’ resources to mine crypto.
• The operation screened 4,699 internet protocol addresses suspected of participating in crypto mining and picked out 184 IP addresses belonging to 77 public entities.
• An inspection team then visited the facilities of 20 of the public entities affiliated with 119 IP addresses.
• The team was comprised of the Provincial Commission for Discipline Inspection, the Provincial Party Committee’s Cyberspace Administration, the Provincial Communications Administration, the Provincial Public Security Department and the Zhejiang branch of the National Security Center.
• Photos posted by the Zhejiang Cyberspace Agency shows stacks of GPUs, commonly used in ethereum and filecoin mining, but also sometimes used in bitcoin mining.
• Ethereum and filecoin mining on GPUs is generally harder to locate because it doesn’t have the same high energy requirement that bitcoin mining has and doesn’t require specialized equipment, known as crypto mining application-specific integrated circuits (ASICs).
• These types of mining activities were relatively unaffected by a crackdown that started in May, compared with bitcoin mining.
• Whereas bitcoin mining in China took a big hit to the point that it has been virtually eliminated from the country, Ethereum’s hashrate has continued on a steady upward trend.
• Around the same time that Zhejiang started the probe, Hebei province in northern China announced a similar investigation, targeting government facilities and universities.
• A Sept. 24 notice posted by China’s highest economic planning body, the National Reform and Development Commission, also called for investigations into crypto mines set up in government-funded big data and high-tech parks.
• The Zhejiang announcement seems to confirm social media posts claiming that agencies across China are screening IP addresses for potentially illicit mining.
• China is grappling with its worst power shortages in a decade, and Zhejiang is one of the hardest hit provinces.

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