DA: County Employee Led Bitcoin Mining Operation From Central Riverhead County

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The center of the county in Riverside. (Credit: Google Maps)

A man from Mattituck who works as a Suffolk County Information Technology Supervisor is said to have led an unauthorized cryptocurrency mining operation from the Riverhead County offices, a program that uses “an enormous amount of resources. And cost thousands of dollars in electricity over the past seven months, according to Suffolk County District Attorney Timothy Sini.

Christopher Naples, 42, faces several counts of illegally using government resources for personal gain at taxpayer expense, according to the DA.

Mining cryptocurrency requires a huge amount of resources, and miners must figure out how to cover all those electricity and cooling costs, 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, is said to have led the mining of Bitcoin and other cryptocurrencies out of central Riverhead County. The district attorney’s public integrity office has opened an investigation which has found that since at least February 2021, Mr Naples has been using the county’s electricity, internet access and other resources. At least 10 machines have been in operation since that time at a cost of more than $ 6,000 to the county, an audit found. The investigation into the costs of additional devices is ongoing.

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

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

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

When investigators entered the room, an alarm sounded, indicating the temperature was too high, potentially endangering the county’s infrastructure. Within hours of shutting down the devices, the temperature in the room dropped 20 degrees, the prosecutor said.

The devices are estimated to cost around $ 4,200 per month each in electricity based on the minimum kilowatts required to operate and the average cost per kilowatt hour in Suffolk County, according to a press release.

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

Mr Naples was brought to trial in Southampton Town Court before Judge Barbara Wilson on charges of the felony of public bribery, third degree robbery and computer intrusion, as well as a misdemeanor charge of official misconduct. He has been released on bail and is due to return to court on September 16. He is represented by lawyer William Keahon.

Reached by phone Wednesday afternoon, Mr. Keahon said he only had time to comment later in the day.

The New York State Senate passed a bill in June to suspend bitcoin mining for three years in order to complete a “comprehensive generic environmental impact study.” The bill, however, was not passed by the Assembly.

Explaining why Bitcoin uses so much electricity, a New York Times article published on September 3 featured the headline: “Bitcoin uses more electricity than most countries. How is it possible?”

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

This competition for the newly created Bitcoin is called mining.

New York Times

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