Coal Exports Banned? No Problem: North Korea Goes Bitcoin Mining

North Korea might have found a good use for all that coal it is forbidden to sell: electricity generation to run a massive bitcoin mining operation, intelligence companies say.

North Korea might have discovered a somewhat cunning solution to UN sanctions barring it from exporting coal — bitcoin mining, says Recorded Future, an internet technology company that specializes in analyzing and forecasting security threats.

According to the joint report released by Recorded Future and security non-profit Team Cymru, North Korea has displayed a spike in internet activity that the companies have identified as bitcoin mining. The surge began May 17 and was still steady as of July 6, though it is unknown whether it is still going on.

"Before then, I haven't seen any activity indicating that [the North Koreans] were interested in Bitcoin," Priscilla Moriuchi, Recorded Future's director of strategic threat development said in an interview quoted by the Washington Times.

The researchers could not determine exactly how much farming power North Korea possesses. While experts assume that the mining is currently pretty minor, there is a potential for increase, they warn.

Numerous earlier reports indicated North Korea becoming increasingly interested in the cryptocurrency. Since it is hard to trace, bitcoin money might allow the rogue state to overcome sanctions on international payments.

Reports from the last year indicate North Korea was supposedly conducting hacking cyberattacks to steal bitcoins from South Koreans. Now the Democratic People's Republic of Korea is mining as well.

Bitcoin mining requires a great deal of electricity. One of the world's greatest mining farms, located in China's Inner Mongolia, consumes $39,000 of power in a single day, according to Quartz. With North Korea formerly among the top 10 coal exporters in the world, the new sanctions make it seem reasonable for them to put the excess coal into generating power for a massive bitcoin mining operation.

While the analysts underscore that bitcoin can, strictly speaking, be traced, they also acknowledge that in practice this is a rather complicated task that the United States intelligence and financial agencies lack the expertise to complete.

According to Yaya Fanusie, a former CIA counterterrorism analyst quoted by the Washington Times, "North Korea using these technologies is not exactly a loophole to the sanctions — that could be overstating the power of bitcoin itself."

"But you have a cat-and-mouse game evolving, and this is just the type of emerging technology that the [US intelligence community] needs to develop expertise to understand," Fanusie said.

"We're good at tracking traditional banking, but bitcoin is not a Swiss bank," said another former intelligence official, who spoke only on condition of anonymity. The US, he said, should not underestimate the North's increasing hacking capability and online sophistication.