Bitcoin Forum

According to a class-action lawsuit filed in the US district court for Northern California, Bitmain has been taking advantage of its customers the past couple years in an interesting way: mining crypto for itself, using their resources, during the “initialization” process. You read that right. According to at least one Bitmain customer and bitcoin miner, who is filing a suit for damages in excess of $5 million on behalf of miners everywhere, the initial period during which a miner is in its owners’ possession is spent mining for Bitmain’s benefit.

The lawsuit brought by Gor Gevorkyan, who lives in Los Angeles, alleges that the initialization process for a Bitmain miner can be several hours in length. An outfit that purchased, say, 500 or more units, could, therefore, contribute significant hash power to Bitmain — at no actual cost to the company. In fact, the company has already profited prior to receiving this hash power.

Per the filing, there is no way to know how many people are actually represented in the class-action lawsuit because they could feasibly number in the “hundreds of thousands.” Further, it notes that Bitmain did not always operate this way — previously, when miners were in “initialization” mode, they could be set to consume less power.

CCN | https://www.ccn.com/lawsuit-claims-bitmain-mined-bitcoin-using-customer-devices/

This comes out printed as a scandal in the bitcoin news media only now? I thought this was already commonly known by the whole community hehehe.

I reckon all of the Asic manufacturers mine using their customers' hardware before shipping.

It's common knowledge that this is typical industry practice, but this is the first time someone has brought the issue before a judge. It'll be interesting to see how Bitmain responds, and how the court eventually rules. A ruling in favor of the plaintiffs could reverberate across the industry because it will establish precedent in the federal court system.

@squatter. It might also be important to know how much of Bitmain's mining farms and other mining farms supplied to are from California. Is there a big mining farm there or is this lawsuit only from one unhappy individual? hehehe.

It sounds like it was just filed by one unhappy individual. I assume it was filed in California because Bitmain is headquartered in San Jose. That means general jurisdiction applies -- any suit can be filed against Bitmain in California, regardless of where the damages occurred. That's probably why the filing specifies that the class could include hundreds of thousands of people. I'm pretty sure miners from other states can join the lawsuit.

They are not the first company to think of that. I remember there was a big lawsuit against butterfly labs that they were delaying shipment to mine with the software that people prepaid for 6 months earlier. Those greedy bastards will not allow any opportunity to pass by. If they can pack cheaper components into your hardware that will burn your house a year later, they will. There's no warranty on their junk anyway.

don't know how is this news?
it is obvious that all of the mining hardware production companies use the devices to mine coins before they ship them
Bitmain can claim it was "testing" the devices and it was a part of their QA
think that the chances to win the lawsuit are very low, but if it happens the companies like Bitmain are going to pay quite a buck

I think the article refers to the initialisation process after it has been purchased and set up at the customer bases where the equipment has to setup and initialised. This contributes hashing to the bitmain company for a short time before it can be used by the customer