Just over $67 million in Bitcoin has been taken by hackers from the cryptocurrency mining market.
NiceHash, one of the world’s most important cryptocurrency mining marketplaces, has announced that hackers have breached its payment system and emptied the whole contents of its Bitcoin wallet.
After the breach was discovered, the company announced an immediate close down for 24 hours to begin investigating the incident.
The official statement from Wednesday December 6 reads, “Our payment system was compromised, and the contents of the NiceHash Bitcoin wallet have been stolen. We are working to verify the precise number of BTC taken. Clearly, this is a matter of deep concern and we are working hard to rectify the matter in the coming days. In addition to undertaking our own investigation, the incident has been reported to the relevant authorities and law enforcement and we are co-operating with them as a matter of urgency.”
The company itself did not specify how much had been taken, but estimates based on a BTC address shared by a NiceHash user on Reddit suggests that a sum of 4,736 BTC ($67 million or £50 million at current rates) has disappeared.
The company’s official statement added, “We understand that you will have a lot of questions, and we ask for patience and understanding while we investigate the causes and find the appropriate solutions for the future of the service.
“We are truly sorry for any inconvenience that this may have caused and are committing every resource towards solving this issue as soon as possible.”
The company also advising users to change their online passwords as a precaution.
The service allows customers to offer their extra computer processing power for the calculations required to create or ‘mine’ fresh Bitcoin or other digital currencies. The same relationship allows NiceHash users to purchase computer processing power from other users. NiceHash users normally mine altcoins in exchange for their value in Bitcoin.
NiceHash issued two tweets on Wednesday, December 6 informing customers that its servers were offline for ‘maintenance’ and its team was working on a fix. However, the company later said its servers had been breached.
As cryptocurrency continues to grow exponentially, issues such as this are likely to become more common and problematic. Bithumb, CoinDash, Veritaseum and Parity Technologies have already suffered significant losses.
Commenting on the news, Jon Geater, CTO, Thales eSecurity, data security specialist, said, “Thefts of this scale highlight why the devil is in the detail with cryptocurrencies. While bitcoin and blockchain change the rules of transactional security, they are not magic – there’s always devils in the detail and it’s still important to handle security in the networks.
“A hack of this scale makes it painstakingly clear that bitcoin security is far from perfect. Although the protocol and the system are theoretically very robust, over £600 million worth of bitcoin has either been lost or stolen since the creation of the cryptocurrency.”
Jon added, “Many of these losses have emerged from weak security practices, including poor management and protection of the cryptographic keys that quite literally translate to cash. While we don’t yet know exactly what happened with NiceHash, it’s quite likely that this is again what has happened.
“The standard mantra that bitcoin is inherently secure only extends to the transaction network itself, but the problems of security management have not gone away, they’ve just been pushed further out to the edges.”