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Hackers Steal $70 Million in Bitcoin

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scion Member Level  Thursday, 12/07/17 11:56:40 AM
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Hackers Steal $70 Million in Bitcoin

Theft prompts shutdown of NiceHash, which markets itself as the largest cryptomining marketplace

By Steven Russolillo Updated Dec. 7, 2017 5:37 a.m. ET

Nearly $70 million worth of bitcoin was stolen from a cryptocurrency-mining service called NiceHash following a security breach, causing the company to halt operations for at least 24 hours.

“Clearly, this is a matter of deep concern, and we are working hard to rectify the matter in the coming days,” NiceHash said in a statement on its Facebook page early Thursday Asia time.

Andrej P. Škraba, head of marketing at NiceHash, confirmed to The Wall Street Journal that approximately 4,700 bitcoin had been stolen from a bitcoin wallet, an online account that stores the digital currency. Bitcoin wallets, like other online bank accounts, have been targets of hackers in the past.

“It was a professional attack,” Mr. Škraba said. He declined to elaborate further, saying more information will be revealed at a later date.

The hack came as the price of bitcoin surged through $14,000 on Thursday for the first time, according to research site CoinDesk, continuing a rally that has shown few signs of abating. At a recent price of $14,790, those stolen bitcoin are worth more than $69 million.

“It’s a bad thing to happen, but I think it’s going to be forgotten about pretty quickly,” said Arthur Hayes, founder and chief executive of BitMEX, a bitcoin-derivatives exchange in Hong Kong, of the theft. “Everyone is still high-fiving each other with the price over $14,000,”

Bitcoin’s rise from around $1,000 at the start of the year—including a 40% jump in the past week alone—has attracted crowds of eager small-timer investors to what had originally been a curiosity for techies. The price crossed $13,000 on Wednesday, mere hours after breaching $12,000 for the first time and just a week after it first broke above $11,000.

Three exchanges in the U.S. are set to offer futures contracts on bitcoin, another step toward building a traditional market around the stateless digital currency.

NiceHash, which markets itself as the largest crypto-mining marketplace, said it is investigating the breach and cooperating with authorities as it seeks to restore the service “with the highest security measures at the earliest opportunity.”

NiceHash, based in Slovenia, matches people in need of computer-processing power to mine cryptocurrencies with people who have power to spare. Payment is made in bitcoin and other cryptocurrencies.

Should You Buy Bitcoin?

The price of the digital currency has soared, but experts say you should be wary.

“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,” NiceHash said in its statement. The company also advised users to change their passwords.

Security has been an issue with bitcoin for years. One of the best-known cautionary tales is that of Mt. Gox, once the world’s largest bitcoin exchange. It collapsed and filed for bankruptcy protection after losing virtual currency valued at hundreds of millions of dollars in 2014.

The NiceHash hack represents a far-smaller portion of bitcoin’s overall market capitalization, Mr. Hayes notes.

“It just goes to show that bitcoin is a really valuable asset and when you have valuable assets, people are going to try to steal them,” said Mr. Hayes, who predicts bitcoin could hit $50,000 by the end of next year. “So it’s important to be prudent and protect it the best you can.”

Write to Steven Russolillo at steven.russolillo@wsj.com


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