The US Department of Justice (DOJ) has filed federal charges against two senior staff members of a California school district for purportedly running an elaborate crypto mining scheme across the district's own facilities.
TLDR
- The US Department of Justice charged two school district staff with operating a crypto mining farm across the district's 10 schools
- The assistant superintendent and IT director allegedly used school resources like computers and electricity to mine crypto and pocket the profits
- They potentially stole over $1.5 million in school district funds for personal gain
- This comes as US regulators crack down on crypto mining's energy consumption, requiring miners to report usage
- Globally, regulators are concerned about crypto mining's electricity demands - Indonesian police shut down 10 illegal BTC mines accused of stealing $1 million in power
Jeffrey Menge, the assistant superintendent and chief business officer of Patterson Joint Unified School District, allegedly collaborated with Eric Drabert, the IT director, to establish mining rigs in as many as 10 schools under their administrative purview. Exploiting the school's computers and electricity, they are suspected of mining an unnamed cryptocurrency for personal profit over an extended period.
The precise scale of the unsanctioned mining farm remains unclear, as does the crypto asset being mined. However, solo Bitcoin mining is estimated to consume up to 266,000 kilowatt hours for just a single coin - equivalent to a monthly electricity bill of $35,000. One can only imagine the collective energy drain across an entire school district mining for months or years on end.
Beyond the unauthorized crypto mining charges, Menge has also been accused of embezzling up to $1.5 million in school district funds. Drabert allegedly pocketed between $250,000 to $300,000 as well.
This incident comes on the heels of intensifying regulatory scrutiny around crypto's energy usage at both federal and state levels. With Bitcoin prices resurging 40% year-to-date, officials are concerned about heightened mining activity and electrical load. Just this month, the Department of Energy mandated centralized mining companies to begin disclosing their energy consumption.
The environmental impact extends beyond US borders too. In December, Indonesian police dismantled 10 illegal Bitcoin mining operations accused of stealing nearly $1 million worth of electricity. Authorities as far as Iran, Kosovo and Malaysia have also targeted unauthorized mines.
But as crypto adoption accelerates globally, structuring sustainable policy frameworks remains an uphill battle. Total network energy usage is already exorbitantly high, yet individual miners slip under the radar. Even as regulators play catch up, incidents like that in Patterson School District highlight crypto's grassroot accessibility - for better or worse.
While innovation should not be stifled, unfettered mining incentives continue enabling situations like that currently unfolding in Patterson. As global authorities rightfully take a tougher stance on compliance and transparency, the crypto community too must now assume some social responsibility. Spontaneous self-regulation from within carries far more weight than external criticism alone.
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