Bitmain Faces $5 Million Lawsuit for Alleged Unauthorized Mining

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Total News – Atlanta, GA 11/27/2018. Cryptocurrency mining giant Bitmain was sued in the state of California for allegedly mining without customer's consent.

A class action lawsuit was filed by Gor Gevorkyan from Los Angeles against both Bitmain's China- and U.S.-based entities in the federal court of the Northern District of California.

The lawsuit claims that Bitmain's devices use customers' resources to mine cryptos to enrich itself. It also claims that the firm's machines start at full-power high-energy consumption mode right from the start, even before the user's account is linked. The complaint noted that in the past, the firm's ASIC devices could be configured and initialized in low-power mode that did not mine for the benefit of Bitmain.

Bitmain's mining devices is reported to require large amount of energy. As an example, the Antminer S9, requires approximately 1290-1365 watts of power.

According to the filing:

"Until the complicated and time-consuming initialization procedures are completed, Bitmain's ASIC devices are preconfigured to use its customers' electricity to generate crypto currency for the benefit of Bitmain rather than its customers."

In an email to CoinDesk, the firm said that "Bitmain does not mine with customers' equipment and, considering that mining for itself is a small part of Bitmain's business, it has less incentive to do so compared to shipping the equipment as soon as possible to fulfill any confirmed orders."

Founded in 2013 by Jihan Wu and Micree Zhan, Bitmain markets and sells ASIC devices internationally. The firm is also the largest single miner of virtual currency in the world.

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