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Hackers Steal More Than $70 Million in Bitcoin

More than $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.

By

Steven Russolillo

More than $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.

Andrej P. Škraba, head of marketing at NiceHash, said 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.

In a six-minute video posted on Facebook, Marko Kobal, chief executive and co-founder of NiceHash, said either a hacker or group of hackers started infiltrating its internal systems through a compromised company computer on Tuesday at 6:18 p.m. Eastern Time. Within two hours, funds were stolen from accounts, he said.

NiceHash has notified major exchanges and mining pools about the breach “to help us track and possibly even recover the stolen funds,” Mr. Kobal said.

“We are doing really everything we can right now. However, this will take time,” he said. “As soon as we have a solution in place, we’ll reach out, hopefully in the next few days.”

The hack came as the price of bitcoin surged yet again to new highs. Through Thursday morning in New York, the digital currency soared 40% in about 40 hours, hurdling through five separate $1,000 barriers. It recently traded near its all-time high, at about $16,600, according to research site CoinDesk. At current levels, those stolen bitcoin would be worth about $78 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” over the recent gains.

The WSJ’s Thomas Di Fonzo visits one of New York City's bitcoin ATMs to demonstrate how volatile the virtual currency can be in just a day. Photo: Alexander Hotz / The Wall Street Journal

Bitcoin’s rise from around $1,000 at the start of the year has attracted crowds of eager small-time investors to what had originally been a curiosity for techies.

Several exchanges in the U.S. are set to offer derivatives contracts on bitcoin such as futures, 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.”

Based in Slovenia, NiceHash matches people in need of computer-processing power to “mine” cryptocurrencies with people who have power to spare. Payment is made to miners in bitcoin and other cryptocurrencies as an incentive for their processing and verifying transactions through complex algorithms.

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 a separate statement on its Facebook page. 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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