U.S. DOJ Files Charges Against two staff members of Patterson Joint Unified School District for running an unauthorized crypto mining operation using the school’s electricity resources.
It turns out that if you want to commence crypto mining operations in the United States, then you shouldn’t carry them out in a school district, otherwise, you would get into trouble with the authorities.
Two senior staff members of the Patterson Joint United School District found this fact the hard way when they were allegedly found conducting a crypto-mining operation on the boundaries of the district’s 10 schools while using the school resources and running up the electricity bill in the process.
These two staff members were charged by the United States Department of Justice (DOJ) for carrying out these illegal crypto-mining operations, an activity they weren’t supposed to conduct as it violated the U.S. energy regulator’s recent clampdown on such activities.
The Department of Justice released a statement recently in which it claimed that the assistant superintendent and the chief business officer of Patterson Joint Unified School District whose name is Jeffery Menge, along with Eric Drabert, who is the IT director for the school district, worked together to operate a crypto mining farm and taking profits for themselves.
The statement from the DOJ read: “They purchased high-end graphics cards and used those cards, together with other school district property and electricity, to operate a cryptocurrency mining farm at the school district.”
However, the statement didn’t mention which cryptocurrency the duo was involved in mining and how many schools in the districts were used for these mining operations. The Patterson school district comprises 10 schools that are currently serving 6200 students.
Even though the charges didn’t mention which cryptocurrencies the duo were mining, the most common and well-known answers to the question could be Bitcoin, Monero, Litecoin, Ravencoin, Zcash, or Dogecoin.
Based on current information provided by CoinGecko, the process of solo mining one Bitcoin demands around 266,000 kilowatt hours of electricity. Achieving this would take approximately seven years, with a monthly electricity consumption of 143 kWh.
In addition to accusations of other fraudulent activities, the Department of Justice (DOJ) asserted that Menge embezzled an amount ranging between $1 million and $1.5 million, while Drabert allegedly misappropriated funds in the range of $250,000 to $300,000.
The charges against the two individuals came forward a few days after the U.S. Department of Energy (DOE) requested crypto miners to report their energy usage over the next six months amid concerns about the recent surge in Bitcoin prices that led to increased mining activity.
The Energy Information Administration (EIA), a DOE statistics agency, announced that they will survey to assess electricity consumption by local crypto mining companies, with miners mandated to provide details on their energy use.
The move came in response to Bitcoin’s 18.5% price rise in the three months leading to January 24, prompting fears of heightened crypto mining and electricity consumption.
The U.S. government has been taking steps to regulate the crypto-mining industry, including a proposed 30% incremental tax on miners’ electricity costs in 2023.
Global Bitcoin mining electricity consumption hit a record high of 121.13 terawatt-hours in 2023, with expectations of further increases according to the International Energy Agency (IEA).
The high energy consumption of crypto-mining operations has always been a topic of debate among financial regulators and proponents of the crypto industry. Not to mention the constant backlash the cryptocurrency mining operations have gotten from environment enthusiasts.
The United States is not the only country to voice its concern regarding the increased consumption of these mining operations as regulators around the world are also making efforts to control the excessive power consumption caused by crypto mining.
In December 2023, Cointelegraph disclosed that Indonesian law enforcement shut down 10 Bitcoin mining operations, alleging the organizers engaging in electricity theft totaling nearly $1 million.
As per the recent local report, the North Sumatra Police Force in Indonesia took action against a Bitcoin mining operation spanning 10 locations.
They seized 1,134 Bitcoin mining machines, along with 11 meters of electrical cable and computer equipment. The Chief of North Sumatra Police, Irjen Agung Setya Imam Effendi, accused the organizers of tampering with electrical circuits to illicitly power the extensive number of Bitcoin mining machines.
The improper diversion of electricity was demonstrated by irregularities in the power supply box.
Another incident of a similar nature was reported in China where a Chinese government official, Yi Xiao, received a life sentence for facilitating electricity access to Bitcoin miners.
Xiao, a former vice chairman, reportedly operated a substantial Bitcoin mining enterprise, consuming 10% of Fuzhou city’s electricity supply at its peak.
In September 2021, the People’s Bank of China issued a sweeping ban on all cryptocurrency transactions, including mining which effectively made mining illegal, and crackdowns on mining operations across the country followed.
