Make Kitco Your Homepage

North Korea Opens Doors To Bitcoin 'Mining' Amid Sanctions

Kitco News

North Korea Opens Doors To Bitcoin ‘Mining’ Amid Sanctions

(Kitco News) - North Korea looks to have found a new way to fund its regime amid new sanctions — bitcoin "mining," according to a report released by an intelligence research firm Recorded Future.

“In-depth analysis of North Korean internet activity reveals an informed, modern, and technologically savvy ruling elite,” said the report titled North Korea’s Elite Are Not Isolated.

North Korea reportedly began bitcoin "mining" on a noticeably large scale on May 17.

“Before that day, there had been virtually no activity to bitcoin-related sites or nodes, or utilizing bitcoin-specific ports or protocols. Beginning on May 17, that activity increased exponentially, from nothing to hundreds per day,” specified the report, which was published in the end of July.

Bitcoin “mining” is a process that involves high-performance computers solving complex mathematical problems as well as verifying online bitcoin transactions.

The actual size of North Korea’s bitcoin “mining” capacity is unknown, said Priscilla Moriuchi, the director of strategic threat development at Recorded Future. “We weren't able to determine the volumes, like how many bitcoin they can generate per certain time period. We could just see activity.”

The firm also said that North Korea could be using bitcoin to fund its regime.

“First [hypothesis] is that the activity is sponsored by the state, as a way to generate funds for the regime,” noted Moriuchi. “The second hypothesis is that it's an individual user, among this small sliver of leaders and their families who have access to the internet.”

In terms of who can be behind this new surge in bitcoin activity, the report pointed to elites of the country — the few who actually have open access to the internet.

“While there are no reliable numbers of North Korean internet users, reporters estimate anywhere from ‘only a very small number’ to ‘the inner circle of North Korean leadership’ to ‘just a few dozen families.’ Regardless of the exact number, the profile of a North Korean internet user is clear; trusted member or family member of the ruling class,” the report said.

In fact, university students, government officials, and scientists have access only to a domestic intranet —Kwangmyong, which gives individuals access to email and a number of approved websites only, but is disconnected from the rest of the world, according to media reports.

“It is not clear who is running the North Korean bitcoin mining operations; however, given the relatively small number of computers in North Korea coupled with the limited IP space, it is not likely this computationally intensive activity is occurring outside of state control,” added the report.

It is also possible that North Korea “mined” bitcoin prior to May 17, said Moriuchi. “[North Korea] might have been ‘mining’ bitcoin for a while, but they stopped for a period of time. ... or maybe they are using infrastructure and computers in other places.”

North Korea potentially getting into bitcoin “mining” as a way to raise money for its regime could have serious consequences, especially in light of the new sanctions passed by the U.N. on Monday.

The new measures include capping North Korea’s fuel imports, banning textile exports, and making all new commercial joint ventures with North Korean entities illegal.

Bitcoin has more than tripled in value since the beginning of the year, but this past week, the digital currency saw some major losses, falling below $4,000 level on Wednesday and last trading at $3,840.10, down 7.41% on the day.  The latest big name to call out bitcoin and point to signs of a bubble was JPMorgan Chase CEO Jamie Dimon, who referred to the cryptocurrency as a “fraud,” stating that “someone is going to get killed.”

The latest big name to call out bitcoin and point to signs of a bubble was JPMorgan Chase CEO Jamie Dimon, who referred to the cryptocurrency as a “fraud,” stating that “someone is going to get killed.”

“It's worse than tulip bulbs. It won't end well. Someone is going to get killed,” Dimon said at a conference hosted by Barclays. “Currencies have legal support. It will blow up.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Precious Metal Charts

Follow Kitco News