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DA: Mattituck man, a county employee, ran Bitcoin mining operation in workspace, costing taxpayers thousands of dollars

A Mattituck man who works as a Suffolk County information technology supervisor allegedly ran an unauthorized cryptocurrency mining operation out of the Riverhead county offices, a scheme that uses “an enormous amount of resources” and cost thousands of dollars in electricity over the past seven months, according to the Suffolk County District Attorney Timothy Sini.

Christopher Naples, 42, faces multiple felony counts for illegally using government resources for personal gain at taxpayers’ expense, according to the DA.

“Mining cryptocurrency requires an enormous amount of resources, and miners have to navigate how to cover all of those electricity and cooling costs,” Mr. Sini said in a statement. “This defendant found a way to do it; unfortunately, it was on the backs of taxpayers.”

Mr. Naples, a county employee since 2000, was allegedly running the mining operation for Bitcoin and other cryptocurrency out of the County Center in Riverhead. The district attorney’s Public Integrity Bureau began an investigation that found since at least February 2021, Mr. Naples had allegedly been using county electricity, internet access and other resources. At least 10 machines had been running since that time period at a cost of more than $6,000 to the county, an audit revealed. The investigation into the costs of additional devices is ongoing.

“We will not allow county employees, who are already on the public’s payroll, to steal taxpayer money or illegally use government resources for their own personal gain,” Mr. Sini said.

Investigators executed search warrants at the County Center on Aug. 19 and seized 46 cryptocurrency mining devices that were found hidden in six rooms throughout the building in various spaces. The DA said devices were found underneath removable floorboards, on top or inside server racks and inside an unused electrical wall panel.

Mr. Sini said one of the rooms housed “critically important computer servers, secure data storage systems and communications equipment for the entire county government.”

As investigators entered the room, an alarm sounded indicating the temperature was too high, potentially putting county infrastructure at risk. Within hours of the devices being shut down, the temperature in the room dropped 20 degrees, the DA said.

The devices are estimated to cost approximately $4,200 per month each in electricity based on the minimum kilowatts required for their operation and the average cost per kilowatt hour in Suffolk County, a press release stated.

“The defendant also had to bypass the county’s internet security protocols in order to get these devices online, which could have potentially jeopardized the security of the county’s network,” Mr. Sini said.

Mr. Naples was arraigned in Southampton Town Justice Court before Justice Barbara Wilson on felony charges of public corruption, third-degree grand larceny and computer trespass, as well as a misdemeanor charge of official misconduct. He was released on his own recognizance and is due back in court Sept. 16. He is being represented by attorney William Keahon.

Reached by phone Wednesday afternoon, Mr. Keahon said he did not have time to comment until later in the day.

The New York state Senate had passed a bill in June that aimed to halt bitcoin mining for three years to complete a “comprehensive generic environmental impact study.” The bill, however, did not pass the Assembly.

Explaining why Bitcoin uses so much electricity, a New York Times feature published Sept. 3 featured the headline: “Bitcoin Uses More Electricity Than Most Countries. How is That Possible?”

All around the world, companies and individuals known as Bitcoin miners are competing to be the ones to validate transactions and enter them into the public ledger of all Bitcoin transactions. They basically play a guessing game, using powerful, and power-hungry, computers to try to beat out others. Because if they are successful, they’re rewarded with newly created Bitcoin, which of course is worth a lot of money.

This competition for newly created Bitcoin is called “mining.”

New York times