It has been reported that NiceHash, a Bitcoin mining service, was hacked and BTC funds to the tune of nearly $62 million have been stolen. According to the users of NiceHash, their funds have been taken from their Bitcoin address at the service to another Bitcoin address under the control of an unknown entity.
NiceHash is a company based out of Slovenia and was founded in the year 2014. NiceHash serves as a marketplace where people who have mining equipment for cryptocurrencies like Bitcoin can rent it out to interested buyers.
The sellers find it useful, as they don’t have to bother about mining Bitcoins. At the same time, the service is also helpful to the buyers as they don’t have to make expensive purchases for mining equipment.
The company has paid miners more than one billion dollars in the past three years.
The Current Situation
After the hack, NiceHash issued a statement saying they’re investigating the security breach, adding that they are still trying to ascertain the exact amount that has been stolen. They have also recommended that all users must change their passwords for their accounts.
On Tuesday, NiceHash published another statement saying their service would be coming back soon. In the meantime, users could follow updates on the company’s social media pages as well as a dedicated subreddit, /r/NiceHashHack.
After a hack of such a huge nature, it might be difficult for NiceHash to retain its user base. The website went offline and the company mentioned that this was due to maintenance reasons.
But the statement released later on the company’s subreddit confirmed users’ worst fears.
NiceHash CEO Marko Kobal also addressed users alongside the company’s co-founder, Sasa Coh, in a live stream on Facebook after the cyber attack. Right at the start, the CEO said that he had read the complaints of users. However, many viewers were of the opinion that Kobal and Coh seemed to be guilty and that the hack could possibly be an inside job. This view was also expressed by commenters on NiceHash’s subreddit page.
According to Kobal, the success of the mining service had drawn negative attention from hackers. Many of the viewers asked the CEO to give statements about whether their wallets would be restored. However, both Kobal and Coh did not make any comments about this concern.
The NiceHash executives did state that they are contacting law enforcement authorities for solving the matter.
NiceHash has not mentioned the exact number of Bitcoins that have been stolen. But the users have sent wallet addresses showing that around 4,736.42 BTC, which amounts to around $62 million, has been removed from the NiceHash hot wallet.
Cloud Mining Risks
The latest hack on NiceHash shows that though users can make profits with Bitcoin mining, there are many risks in the online marketplace.
Users of such sites have the advantage of using equipment that they don’t have to purchase for mining Bitcoins. But they are subjected to many risks while performing such cloud mining work, which is far more than the risks faced when you operate your own hardware.
Other Related Fraud
In addition to this recent incident involving NiceHash, there have also been other instances where cloud mining has been a victim of fraud.
For instance, about three years back, there was a Ponzi scheme created by Gaw Miners. The fraud scheme was presented in the form of PayCoin, created by Gaw for conducting the scam.
Earlier this year, Gaw Miners CEO Josh Garza was charged with a liability of around $10 million towards the amount made in the form of profits through the scam.
The hack of the NiceHash mining service comes at a time when Bitcoin is reaching its highest value in recent times. Bitcoin price has been on a continual growth spree this year, even exceeding $16,000 over the past few weeks.
The latest attack on NiceHash only brings into focus the high risk faced by digital currencies such as Bitcoin. For the past few years, there have been more than 36 heists on exchanges that offer services for selling and buying cryptocurrencies like Bitcoin.