Technology |Explainer

NiceHash CEO speaks out after $60m cryptocurrency hack

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On Wednesday 6, WikiTribune broke the story that Slovenian-based Bitcoin miner NiceHash may have been hacked around $60m. The company posted an official statement shortly after confirming that it was true.

WikiTribune subsequently sent some questions via email – a few of which were from Reddit users – to NiceHash to clarify the extent of the situation. Here is an interview with CEO, Marko Kobal. The transcript was edited for clarity.

Background from the CEO

We are the largest crypto-mining marketplace in the world, and have been doing this since 2014, it’s been our dream and we’ve been highly successful which is why we became a target in the first place. We saw how important Bitcoin would become – you will have seen how its value has skyrocketed this week hitting c.US$17k, and even with the issue we ourselves have faced, its rise is inevitable.

We would not exist without our devoted buyers and miners all around the globe, and they are our number 1 priority – our users have made the equivalent of over US$1 billion since we started and are keen for us to start up again.

On top of our existing community, we seen a lot of other new users and followers of Bitcoin asking questions. It’s important to explain that NiceHash is not just a bank for Bitcoin, or an exchange: it is a marketplace matching Bitcoin miners with those who wish to ‘lease’ spare computer processing power that’s needed to do it.

In terms of the hack, we believe almost all of our 740,000 registered users have been affected, with approximately 4,700 BTC taken in total. At the present time, this is equivalent to around US$62m.

Response to questions

Question: Users on Reddit pointed to a specific external wallet which has more than $60m on it. Can you confirm that this is the correct address? 

Answer: That is correct, it is publicly available information on the Blockchain.

Q: Given that the stolen coins are visible to all, what realistic chance does the hacker have to hide, convert or spend these coins?

A: That’s a very good question. The fact is that the world is watching that address now. Hackers must be aware of that fact and due to co-operation with major exchanges there is also a chance that the coins will be confiscated if moved to an exchange.

Q: Is the hacker(s) holding these stolen bitcoins to ransom in exchange for an alternative or untraceable payment?

A: Due to the authorities’ ongoing investigations we can’t provide any further specific details on the breach right now but our aim is to continue to give updates to our community. We have opened a dedicated community for researchers and blockchain experts to help track and analyze the stolen funds. The address is here.

Q: What steps will NiceHash take to regain their customers trust? 

A: The support we have received from our community during this crisis has been immense. We are truly moved by the tens of thousands of messages from our community of miners. We are taking all the necessary steps to re-establish our systems with bullet-proof security protocols, and enable miners to start earning money again.

We understand why everyone is upset, and we are truly sorry. We are taking responsibility and want to demonstrate the openness and transparency which is the cornerstone of the world in which we work.

We know we have to build up trust again, we know that, but the overwhelming majority of our community of nearly 750,000 registered users have been very supportive and want us to get the site up and running so they can start making money, mining and leasing again.

It will take time but we are working on a solution to ensure all users are reimbursed. That is clearly a key concern for our users, and we understand this, we are not running away from our responsibilities. As soon as we have a plan in place we will update all users on our intended solution, and we’re sorry for any inconvenience which has been caused.

We’re going to make sure that we learn from this and come back even stronger and safer.

Q: What’s the likelihood of the company covering more than $60m in losses? Are you able to compensate users?

A: We fully intend to make this right. It’s a matter of deep concern to us and we’re working hard to rectify the matter in the coming days. We’re working on a solution to ensure that all users are reimbursed. These things are delicate matters, and take time, so we would ask our community to be patient while we get this fixed and fully investigated. As soon as we have a full plan in place we will communicate it to our users and all those affected.

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