Bitcoin Mining and Its Many Security Threats

Digital currencies carry a number of new security considerations with them. Bitcoin mining is a booming industry, with plenty of opportunities for theft and deception. Miners themselves face numerous security threats, and everyday citizens could find themselves compromised by unscrupulous miners.

Conventional Burglary

With how high-tech most Bitcoin mining operations are, most people focus strictly on cybersecurity aspects. However, one of the biggest threats to minor operations is one that’s common to all businesses. Somebody could simply break in and steal all of the Bitcoin mining equipment.

You can mine Bitcoin with essentially any computer, but the problem is that any income you could generate would be little to nothing when using a standard computer. Hobbyists and small operations use sets of graphical processing units (GPUs), which handle the complex calculations involved in Bitcoin mining much more efficiently.

GPUs can fetch handsome prices on the second-hand market but are far from the most valuable Bitcoin mining equipment. Today, serious Bitcoin miners use application-specific integrated circuits (ASICs) that have been custom-built to mine cryptocurrency as efficiently as possible. These units start at $2,000 each and run well into the $10,000 range, and an operation will likely have multiple units. Given how compact they are, ASICs are an alluring prize for neighborhood bandits.

Cryptojacking

This isn’t so much a threat to Bitcoin miners as it is a threat coming from them. Much like the term carjacking, cryptojacking refers to someone taking control of your hardware and using it for their own purposes. The difference is that with cryptojacking, you don’t even know it’s happening.

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Hackers develop specialized malware to take advantage of computational power on the computers of their victims. You might pick up such malware by visiting disreputable websites or interacting with an already infected network. Once on your computer, the malware will mine Bitcoin into the hacker’s wallet.

While your computer likely couldn’t produce much Bitcoin, even working at full capacity towards that purpose, the goal of cryptojacking is to infect as many users as possible. Taking just a little computational power from thousands, tens of thousands, or even millions of computers can quickly add up to a steady stream of mined cryptocurrency.

In general, this malware doesn’t have any other negative effects. The hackers want it to run undetected on your computer forever. They don’t want to be caught trying to steal passwords or take over control of your computer. This means that you’re generally safe, and the only people who would ever even notice cryptojacking are companies with thousands of computers that can quantify the drop in performance.

Some types of cryptojacking are even more benign. They’ll include scripts on websites that use your browser to mine Bitcoin while you’re visiting. While one could certainly say they’re dishonest, they aren’t doing any real harm here.

Private Key Theft

When Bitcoin and other cryptocurrencies are mined, they go into a wallet, just like when purchasing or trading crypto. This means that hobbyists and mining operations need to protect their wallets if they are to protect their coins. One of the biggest threats is the loss of your private key, which will give whoever has it full control over your cryptocurrency.

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A private key is a 256-bit number, meaning a string of 256 1’s and 0’s. This can be represented by a 64-character hexadecimal number, using the characters 0 to 9 and A to F. In either case, it’s not something you’re going to remember. It has to be stored somewhere, and the way you store it opens up potential security risks.

For example, if you store it in a notepad document on your computer, all anyone needs to steal your private key is access to your computer. You can also write it on a piece of paper, but again access is the problem. Some people get around this issue with a hardware wallet, a USB stick that holds the keys. They often have their own passwords, meaning you have two layers of security. Anyone trying to gain access needs both the physical hardware wallet and the password.

For the most part, Bitcoin mining security is essentially the same as any other type of security. Being cautious and implementing a few prudent measures is generally enough to protect most people, with luck deciding the remainder.

Fake Mining Schemes

There are many get-rich-quick schemes such as Bitcoin Era which pretend to offer massive ROI and associate themselves with mining rigs. According to industry watchdog website ScamCryptoRobots.com, many victims end up taking the bate and eventually end up losing an exorbitant amount of money. In some cases people declare bankruptcy or lose their pension money. We strongly recommend you consult with licensed professionals before risking your money.

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About the Author: Osmond Blake

"Web geek. Wannabe thinker. Reader. Freelance travel evangelist. Pop culture aficionado. Certified music scholar."

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