Law enforcement officers have uncovered a psychiatric clinic at Russia’s oldest prison that was secretly converted into a bitcoin mining farm.

A deputy warden and his accomplices are under investigation for their suspected role in constructing the crypto farm after being accused of stealing electricity to produce digital currencies.

The Butyrskaya prison in the Tverskoy District of central Moscow is one of the oldest prisons in Russia, dating back to the 17th century. The prison was said to be constructed around 1771.

Clandestine Bitcoin Mining Operation

Investigators have discovered that the mining equipment was installed by the warden and his accomplices in November of last year. Throughout January and February of this year, the mining rigs mined cryptocurrency.

                             A data center at sanctioned Russian bitcoin miner Bitriver (Alexander RyuminTASS via Getty Images)

Suggested Reading | Crypto Disaster: Ethereum Co-Founder Vitalik Buterin Claims He’s Not A Billionaire Anymore

During that time period, the hardware utilized nearly 8,400 kilowatts of government-paid electricity at a total cost of more than 62,000 rubles (nearly $1,000).

The jail officer is therefore accused of “obviously exceeding his authority and thereby gravely harming the legally protected interests of society or the state.”

A week prior, operatives of the Russian Federation and the Russian republic of Dagestan discovered a massive cryptocurrency mining plant in Makhachkala, the capital of the republic.

Crypto Miners Are Drawn To ‘Bitcoin-Friendly’ Russia

According to the Tass news agency, authorities confiscated 1,476 equipment used to mine bitcoin and other cryptocurrencies.

Cryptocurrency miners are attracted to Russia because of its subsidies and rare occurrences of electricity theft. Regions such as Irkutsk Oblast and Krasnoyarsk Krai, which have enjoyed historically low electricity rates for residents…

Despite the recovery, major crypto tokens failed to break past the key psychological levels. The crypto market is still in the bear phase, with no end in sight, said experts.

All the tokens were trading with decent gains. Avalanche surged 5 per cent, whereas Solana rallied 4 per cent. Ethereum and Bitcoin gained 3 per cent and 2 per cent, respectively.

The global cryptocurrency market cap was trading higher at the $1.29 trillion mark, jumping more than 2 per cent in the last 24 hours. However, the total cryptocurrency trading volume rallied more than 28 per cent to $62.13 billion.

Expert take
The Chinese govt had banned all crypto operations in China in mid of 2021. This resulted in a 50 per cent drop in hash rate, which led to miners migrating to different countries such as Kazakhstan and US, said WazirX Trade Desk.

“Data indicates that some of the miners are still operational which means that the operations have gone underground. Mining hash rate in top three countries is — United States at 37.84 per cent, China at 21.11 per cent, and Kazakhstan at 13.22 per cent.”

According to a core developer, the transition to proof-of-stake is scheduled to be completed in August. He also stated that the merging is complete and that they are currently in the testing phase.

Global updates

• In the two weeks since Terra’s US dollar-pegged stablecoin terraUSD (UST) lost its peg, causing massive investor losses, billions of dollars have been taken out of the ecosystem.

• Former BitMEX CEO Arthur Hayes was sentenced to two years of probation, with home detention for six months and location monitoring, in a federal courthouse in New York.

• Hayes had pleaded guilty in February to charges he willfully failed to implement an anti-money laundering (AML) program at the exchange.

• Any drag on aggregate US spending from the recent decline…

Digestible updates on what’s new in China’s world of Web3, NFTs, metaverse and beyond, compiled for you weekly by Pandaily.

This week: Blockchain startup CyberConnect raised $15 million in series-A financing to restore data ownership, Web3-focused branding firm Gusto Collective closed an $11 million seed round, bitcoin mining rebounds in China despite Beijing’s crypto ban, and more.

Blockchain Startup CyberConnect Raised $15M Series A to Restore Data Ownership

Social graph protocol startup CyberConnect said on Tuesday that it has closed a $15m series-A financing round. TechCrunch and CoinDesk first reported the story.

• Animoca Brands, a Hong Kong-based venture capital and gaming software firm, and Sky9 Capital, a Shanghai-based venture capital firm, co-led the round.
• CyberConnect will use the proceeds to build the protocol, expand the team, and take on new Web3 projects, CyberConnect CEO Wilson Wei told CoinDesk.
• “In Web2, companies with the largest social network own users’ social graphs and build walls around them to stem competition and advance corporate interests,” said Wei in comments to TechCrunch.
• Cyberconnect’s goal, therefore, is to create a social graph protocol allowing data to be shared freely among computers without a centralized agent like Facebook.
• Cyberconnect’s solution has two components. It offers a software development kit (SDK) for developers to create custom apps to help end users manage their social graph, and a “social data network” that aggregates and monitors users’ Web3-related activities.
• Cyberconnect operates with a team of 27 across China, North America, and Europe. (CoinDesk, TechCrunch)

Web3-Focused Branding Firm Gusto Collective Closed $11M Seed Round

Hong Kong-based Gusto Collective, a content production service for brands, has raised $11 million in seed round financing, bringing the firm’s total valuation to $23 million, reported Tech In Asia.

• Animoca Brands and Gaw Capital, a Hong Kong-based private…

Bitcoin production is rolling on in China despite Beijing’s strict ban on crypto mining

China was once the world’s biggest crypto mining hub.

And Bitcoin miners aren’t giving up, despite Beijing’s ban on the practice.

Several underground mining operations have since emerged in China, with miners taking care to work around Beijing’s ban.

Last year Chinese authorities launched a fresh crackdown on crypto, abolishing mining to combat the creation of new digital currency.

Many miners fled to other countries, including the U.S. and Kazakhstan, which borders China.

But now, fresh research from Cambridge shows that Chinese bitcoin mining activity has quickly rebounded.

This is a remarkable comeback following China’s share of global bitcoin mining plummeting to zero in July

Within a few short months, the new data suggests China made up just over 22 per cent of the total bitcoin mining market

Common currency within Eurasian Economic Union has become vital necessity – Minister

Bitfarms (NASDAQ:BITF) is now 80% off its all-time high, so should you buy the dip, or was the stock purely overvalued and is now falling in line with reality?

The fundamental answer using standard equity valuation methods is that Bitfarms is undervalued. But, as you surely know, the underlying asset Bitcoin (BTC-USD) has a mind of its own, and short-term fluctuations can make and break individuals or companies overnight. As per my last article, Bitfarms is still a long-term buy if you are capable of withstanding the volatile nature of the underlying asset class.

Heightened Fiscal Risk, Strong Operations

Bitfarms surprisingly turned a profit of $5 million or 0.02 EPS, despite the collapsing cryptocurrency prices. But, standard accounting net income is not the greatest for analysis of Bitfarms’ (or crypto miners in general) underlying operations. A more meaningful metric is EBITDA or the adjusted EBITDA to evaluate operational performance.

The adjusted EBITDA gives a clearer view of the underlying operation. It removes the impact of the standard accounting depreciation and interest, eliminates the effects of share compensation and financing expenses, and perhaps most importantly, incorporates unrealized gains and losses.

We will still look at the impact of financing down further as it is generally vital but not necessary when looking at the underlying operations.

As holding Bitcoin is a core tenet of Bitfarms, incorporating the unrealized gains and losses, which are not included in accounting EPS, is extremely important.

So, year-over-year adjusted EBITDA grew 64% despite the polar opposite market conditions.

Energy Pressure

The decline in Bitcoin prices was primarily responsible for squishing the gross margin to 76% from 84% in Q4 2021. During Q1, prices ranged between $33K and $46K, so if the current price of roughly $30K stays for the remainder of Q2, expect a further compressed gross margin….

A new report claims that a subcontractor working for Russia’s intelligence service has a botnet capable of manipulating trends on social media platforms on a “massive scale.” The report, published Thursday by the cybersecurity firm Nisos, alleges that the Moscow-based firm 0day Technologies can spread disinformation at a frightening rate using a customizable suite that is tied to a malicious network. The company has previously worked with the Federal Security Service, one of Russia’s primary intelligence agencies.

The report is based on documents and other materials that were stolen from the contractor and leaked by the hacktivist group “Digital Revolution” in March of 2020.

Botnets are networks of malware-infected devices that cybercriminals use to engage in coordinated malicious behavior. Hackers use them to launch cyberattacks, engage in crypto-mining, spread spam emails, and other terrible stuff.

In this case, 0Day Technologies is alleged to have wielded a botnet codenamed “Fronton” (or “Фронтон,” in Russian), which came equipped with a dashboard suite capable of generating fake social media profiles and distributing inauthentic content at scale. The suite, dubbed SANA, enables the user to “formulate and deploy trending social media events en masse,” the Nisos report says.

What this means is that SANA could engineer what the report dubs “newsbreaks,” or massive coordinated posting efforts that generate “information ‘noise’ around a brand or company and attracts media attention.”

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“SANA provides for the creation of social media persona accounts, including email and phone number provisioning. In addition, the system provides facilities for creating these newsbreaks on a schedule or reactive basis,” the…

Kneehill County council unanimously approved the re-zoning of a one acre piece of agriculture land to light industrial to accommodate a cryptocurrency mining operation. The decision was made after a public hearing May 10.

Councillors were considering an application by Fire Technology Corp. to rezone a 1.04-acre portion of SE 28-32- 26 W4 from agriculture zoning to light industrial zoning to allow for a cryptocurrency mining facility.

County Manager of Planning and Development Barb Hazelton presented the results of public advertising of Fire Tech’s application.

“The subject parcel is owned by GVF Contracting Ltd. (Gordon Ferguson). It is accessed by Range Road 26-3 approximately 1.5 miles south of Hwy. 27 and just over two km. southwest of the Hamlet of Torrington,” stated Hazelton in her report.

“The area of the parcel to be considered is currently being leased by Ember Resources Ltd. Fire Technology is looking to lease a 1.04-acre portion of this existing leased area for a micro-power generation and cryptocurrency mining facility.

“Fire Technology Corp. is a registered corporation in Alberta. The parent company is a private fund management institution registered in China. The have built a number of cryptocurrency mining facilities in China as well as one in Kazakhstan.

“Cryptocurrency mining requires the use of sophisticated computers with significant electricity needs.”

Hazelton noted councillors already approved first reading of the re-zoning bylaw, and this application was publicly advertised and comments requested from referral agencies.

Hazelton pointed out this application was only to re-zone the property; the cryptocurrency facility will go through a separate development permit process.

Looking at correspondence Hazelton noted no referral agencies submitted comments, and the county received no comment in favour of the facility.

The county received one letter from Pam Beauchamp, who was opposed to the application for the following reasons:…

What happened

Shares of Canaan (CAN 7.64%) surged as much as 21.3% higher on Thursday, following the release of impressive first-quarter results. By 3 p.m. ET, the stock had retreated to a still-impressive gain of 10.4%.

So what

The maker of microchips and systems specially intended for mining Bitcoin had guided first-quarter sales to approximately 1,550 million Chinese renminbi, 290% above the year-ago period’s result. That didn’t quite happen. Canaan’s first-quarter revenue stopped at 1.356 million renminbi, which translates to roughly $214 million.

On the other hand, adjusted earnings landed at $0.41 per American depositary share (ADS), up from $0.01 per ADS in the first quarter of 2021. Furthermore, Canaan’s revenue was limited by accounting practices as prepayments for crypto-mining machinery were recorded as prepayments and matching contract liabilities. These payments will move onto the income statement in future reports, as the prepaid chips and systems are delivered to customers. In the first quarter, the balance of prepaid contracts rose by 436 million renminbi, or $67.7 million.

Now what

These results show robust interest in Canaan’s Bitcoin mining hardware, even though Bitcoin prices have fallen 39% lower in 2022.

The company is also dealing with lockdowns and quarantines in many Chinese cities as the country struggles to control another COVID-19 breakout. The lockdowns froze the delivery of fully manufactured mining systems during the first quarter. Many of these stalled deliveries have been completed after March 31, when books were closed for the first quarter, so most of the prepaid revenue should make its way onto the second quarter’s revenue line.

In the long run, Canaan’s business fortunes depend on continued demand for Bitcoin mining hardware, which in turn should rise and fall along with the cryptocurrency’s prices. Also, Canaan started to set up its own Bitcoin mining operations in Kazakhstan in…