Russian security forces have arrested several Russian nuclear scientists working at a top-secret nuclear warhead facility for allegedly mining crypto-currencies, BBC reported.
According to local media, the nuclear scientists were attempting to use one of the most powerful computers in Russia for Bitcoin mining. The number of Russian nuclear scientists arrested has not been specified, but local officials have confirmed that they were employed at the restricted Russian Research Institute of Experimental Physics (RFNC-VNIIEF), located in the city of Sarov, Nizhny Novgorod.
Sky News cited Tatyana Zalesskaya, head of the institute’s press service, confirming the arrests to Interfax news agency.
“As far as we are aware, a criminal case has been launched against them,” Zalesskaya said. “Similar attempts have recently been registered in a number of large companies with large computing capacities, which will be severely suppressed at our enterprises, this is technically a hopeless and criminal offense,” she added.
Shortly after Ms. Zalesskaya’s statement, a press release coming from the Research Institute of Experimental Physics confirmed “an attempt at unauthorized use of the institutes’ equipment for personal needs, including so-called mining.”
According to Bloomberg, nobody picked up the phone at the press center of the Federal Security Service, which handles such cases.
The Institute’s supercomputer was not supposed to be connected to the internet in order to prevent intrusion. As soon as the Russian nuclear scientists attempted to do so, the nuclear center’s security department was instantly alerted, BBC reported.
Russian news service Mash said that the Russian nuclear scientists arrested for Bitcoin mining were handed over to the Federal Security Service (FSB).
As Bitcoin mining is an incredibly difficult computational process that the decentralized currency uses to keep records of the Bitcoins’ locations up to date, a powerful computer such as the one in the Sarov nuclear facility would have made the time-consuming process much more profitable.
Bitcoin mining is rewarded rather lucratively with a stash of newly minted, cryptographically-signed Bitcoin, and has become particularly attractive to young Russians.
According to Bloomberg, Bitcoin mining has become such a popular activity in Russia, Russia’s Deputy Finance Minister Alexey Moiseev said earlier this year that young Russians now prefer to give as gifts server farms rather than diamonds.
The country’s vast, low-cost energy reserves make Bitcoin mining much more profitable than in other parts of the world, with even President Vladimir Putin praising the Russian spirit of resourcefulness, saying, “When life sets us certain challenges, we are forced to tackle them one way or another and we do.”
The Russian government is also working on its first cryptocurrency legislation, which would introduce regulation of Bitcoin mining, initial coin offerings, and cryptocurrency trade. The legislation coming from the Ministry of Finance is a direct response to the central bank’s resistance to allowing the exchange of Bitcoins into rubles and other currencies.
Russian nuclear scientists used one of the most secretive military compounds in the world to mine Bitcoins
Known as one of the holiest places of the Russian Orthodox Church in the early 20th century, Sarov, the town where the Russian Research Institute of Experimental Physics is located, is now a closed city.
Surrounded by a tightly guarded no man’s land, with barbed wire fences keeping the curious away, Sarov is home to the Russian Federation Nuclear Center and Atomic Bomb museum holding the “Tsar Bomba,” the most powerful nuclear weapon ever created.
The town, who became a sister city to Los Alamos, New Mexico, the home of the U.S. nuclear weapons design laboratory, has a population of around 90,000, with almost 20,000 people reportedly employed at the Institute of Experimental Physics.
A large amount of controversy surrounds the mysterious compound, with BBC reporting that there are suspicions that the radioactive polonium-210 used to kill ex-FSB agent Alexander Litvinenko in London in 2006 came from Sarov.
The supercomputer used by the arrested Russian nuclear scientists to mine Bitcoins was launched in 2011 and is one of the country’s most powerful computers. Boasting a speed of 1 PFLOPS (10^15 floating-point operations per second), the equivalent of 1,000 trillion calculations per second, the computer would be a Bitcoin mining powerhouse if it were able to connect to the internet.
The high profile arrest of the Russian nuclear scientists accused of illegal Bitcoin mining is a clear sign that the country’s law enforcement has started to crack down on all crypto-mining operations. The Russian government is currently on the brink of launching an official state cryptocurrency, a blockchain-based version of the Rouble, which is most likely the way for the country to maneuver around international sanctions.