Industry News Employee of the US Federal Reserve Fined for Bitcoin Mining at Work

Employee of the US Federal Reserve Fined for Bitcoin Mining at Work

January 31, 2017

A BitcoinIn the last few years, with the advancement of the bitcoin network, the notion of making money off BTC has definitely entered the global mindset, especially in the developed and developing nations. However, this has rarely been related to the process of mining itself, but more about the trading and investment aspects of bitcoin.

This has a lot to do with the fact that the mining became too demanding for individuals working with their private rigs. Today, even with a mining pool membership, a single person has a really slim chance of earning any money as a stand-alone miner. In this regard, the power and internet access bills would make any profit exceedingly small if the profit would be attained at all.

But, in a case where both of these would come for free, the idea of earning with mining BTC suddenly becomes a lot more feasible. The same thought went through a single federal employee when he decided to take up the chance to covertly set up a mining rig on his government job. Now, the same person has been brought to justice but still, his story remains a very interesting real-life tale of individual mining on the other side of the law.

Nicholas Berthaume

The man in question is called Nicholas Berthaume and recently, he had been fined $5,000 and also placed on probation. The reason for this was the fact that he was caught mining BTC using a server owned and operated by the US central bank. The Fed’s Office of the Inspector General named him and explained that Berthaume worked in the position of a communication analyst.

Once the case unraveled and implicated him, he was placed on a yearlong probation and finally accepted a plea deal near the end of January 2017. The charges were defined as the unlawful use of government property, which is a misdemeanor and Berthaume decided to plead guilty and accept his responsibility in this matter.

The documents used in the Berthaume case show that he was indicated in these illegal dealings in October 2016. But, they also point out that at that moment, Berthaume is believed to have been mining BTC using the same government server for more than two years. The same time period is supposed to cover a time span between March 2012 and June 2014. Because the process of hashing or mining is energy intensive, there is no doubt that the same undertaking took plenty of government energy.

Interestingly, in the same statement, the inspector general pointed out that the investigation was not able to assert the number of BTC this operation produced. He also said that the employee tried to hide his operation once he figured out that the authorities found the process had taken place.

The Process

At the first glance, it seems that the easiest way of attaining bitcoin, which can be used for online gambling and many other things, would be to place a dedicated mining rig inside of a government building and simply hook it up to the infrastructure. Of course, the same would be exceedingly hazardous because even the most minuscule tech checkup would almost certainly detect the piece of hardware if they come across it.

An operation like this is more than likely to be discovered in a really short amount of time. That is probably the reason why Berthaume took a different approach. The investigation showed that he changed security safeguards to be able to access the server remotely, mainly from his home. Initially, he denied any knowledge about the case and insisted he was free of any wrongdoing.

But, being spooked by the investigation, Berthaume tried to remotely delete the same software he installed with the purpose of concealing his transgressions. Clearly, the same thing did not bear fruit for the federal employee. With all of this info, the most likely scenario is that Berthaume took a piece of code and embedded it inside of the servers, turning a part or all of it into a mining machine.

The period of time he spent mining shows that he devised a way to delegate the processing power, apparently being able to keep the server on its primary function while it also did the bitcoin hashing calculations. As this proceeded, he was able to contact the server remotely and do any modifications off-site, lowering the chance of him being discovered.

With all of this in mind, there is no doubt that Berthaume had the mind of a crack BTC developer to pull all of this off. It is very unfortunate he did not choose to invest the same brain power into the legitimate domain of BTC development where he could have become valuable members. But, at least in theory, he can still do this now, being that he is freshly unemployed.

Future Safeguards in the Agency

Naturally, this case rattled plenty of cages inside of the same US agency. While the government of the United States is working on bringing the blockchain into the public service domain, utilizing government equipment for bitcoin mining includes more than one red flag. That is the reason why the agency clearly stated that they have placed security measures to stop anything like this occurring once gain in the future.

But, a cynical view would be that these safeguards existed even before Berthaume. Yet, he still managed to override them quite effectively. Similar to eSports and other digital ventures that connect many parties on different system levels, the security that supports the Federal Reserve has to beefed-up not only in terms of quantity but also quality.

If it is not, the next opportunity to compromise the network from outside might not be as painless as bitcoin mining. It is not hard to imagine a hostile party entering the server and wreaking havoc there to a degree that would make the Berthaume incident something of a very pleasant memory.

While BTC mining is a small embarrassment, this second type of security exploit could end up being a full financial and political catastrophe.

Source: CoinDesk