Bitmain Customers File $5 Million Lawsuit, Claiming the Company Mined With Their Devices

Multiple Bitmain customers have filed a $5 million class action lawsuit against the mining giant in California. The suit alleges that Bitmain used mining devices customers had purchased to mine crypto for itself before customers set up the devices for their personal use. This meant using customers’ personal electricity for Bitmain’s profit, unbeknownst at the time to the customers.

The suit (which you can read here) was filed on November 19 by lead plaintiff Gor Gevorkyan, who lives in Los Angeles and had purchased multiple Bitmain products, including the AntMiner S9 in January 2018. The lawsuit includes more than 100 additional plaintiffs, while defendants include both Bitmain Inc., based in Palo Alto, and Bitmain Technologies, Ltd., based in Beijing. More than 100,000 Bitmain customers in the United States were believed to have been taken advantage of in this way by Bitmain, according to the lawsuit.

“As alleged herein,” the suit states, “until the complicated and time-consuming initialization procedures are completed, Bitmain’s ASIC devices are preconfigured to use its customers’ electricity to generate crypto currency [sic] for the benefit of Bitmain rather than its customers.” The setup of Bitmain’s devices can take up to a few days. (Bitmain denied the allegations to CoinDesk, writing, “Bitmain does not mine with customers’ equipment and, considering that mining for itself is a small part of Bitmain’s business, it has less incentive to do so compared to shipping the equipment as soon as possible to fulfill any confirmed orders.”)

According to the lawsuit, Bitmain devices didn’t always do this. It was only after the company “established itself as one of the world’s largest crypto currency [sic] miners in the last several years” that the company “redesigned its ASIC devices” to mine for the company’s own benefit until customers were able to configure them otherwise.

Two California Business and Professional Codes appeared in the lawsuit. Code 17200 states that “unfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” Bitmain did not tell customers it would be using their purchased devices for the company’s profit—deceptive indeed, if the accusations are proven true. Code 17203 basically states that any victims of the acts specified in Code 17200 are entitled to compensation from the guilty party.

It’s hard to find an exact precedent for a case like this. Television companies can hardly use the TV sets people purchase to remotely watch their favorite shows using the customers’ power. Rather, what Bitmain has been accused of doing is almost like a new form of “cryptojacking,” in which people remotely hijack unsuspecting people’s computers to mine cryptocurrency for the hijacker’s benefit.

Stealing electricity also isn’t novel. In July 2013, for example, The Guardian reported that electricity theft cost customers a total of £200 million per year (just about £7 per customer—enough for most not to notice). Close to a third of that theft went to powering marijuana farms.

What’s maybe most concerning is vendors’ ability to sneak into customers’ homes by way of their products. Bitmain allegedly siphoned off consumers’ electricity without warning and maintained control over products customers believed belonged to them. Customers cared because it hurt them. It cost them money. But even control that feels benevolent is still control: Apple releases new updates remotely to our smartphones all the time—updates we like and want, so the company’s power to alter “our” products is good. But then the user interface changes one day and we remember how little control we have over the devices we carry with us at all times. Apple has shared customers’ location data with third parties without asking for consent, and Amazon’s Alexa is guilty of sharing a user’s private conversation the device recorded without her knowing. “I feel invaded,” she said at the time. And the value of our personal information is priceless compared to the cost of our electricity bills.

Maybe there isn’t an exact precedent for how Bitmain allegedly used its customers’ purchased products, but giant tech companies getting into our personal lives certainly isn’t anything new. There is special irony in Bitmain’s case, though, since one of the main purposes of blockchain tech is to purportedly free us from the shackles of Big Tech.