N Korea Awash with Cryptocurrencies without Mining Single Coin

North Korea is believed to have amassed a pile of cryptocurrencies without mining a single coin.

North Korea is believed to never have mined a single Bitcoin, but the impoverished communist nation is flush with cryptocurrencies.

US-based cybersecurity firm AlienVault said early this year that while there is evidence of North Korea mining both Bitcoin and Monero, it is doing so using foreign computers and funneling the coins back into the country through the state-owned Kim Il Sung University.

A report by The Investor cited experts as claiming that Pyeongyang is incapable of supporting crypto mining operations because of the high energy requirements, so it just resorts to hacking.

Pyeongtaek University cyber security professor Chung Tae-jin was quoted as saying:

“North Koreans can mine digital coins as well. But producing cryptocurrency is not cost-effective for North Korea as it requires large amounts of electricity and time. It doesn’t make sense for North Korea, which is suffering from power shortage, to earn coins through laborious work of mining. Its cryptocurrency aim is to raise money to maintain its regime. So North Korea will focus more on hacking cryptocurrencies, instead of mining them.”

North Korea’s hacking capability

Former US National Security Agency (NSA) officer Priscilla Moriuchi estimated that Kim Jong-un's regime had amassed some 11,000 Bitcoins from its sophisticated hacking operations and may have collected up to $210 million by selling the cryptocurrency when its value peaked at nearly $20,000 last December. The money is likely to have been spent on the country’s military machine.

According to North Korean defector Kim Heung-kwang, a former computer science professor at Hamheung Computer Technology University, there are at least 7,000 hackers in North Korea supervised by the country’s intelligence agency Reconnaissance General Bureau. The members of this so-called Lazarus Group are top engineers chosen from the best universities.

“At the agency, they obtain hacking capabilities and receive intensive training for cyberwar. They are capable of mining cryptocurrencies as well,” Kim said.

Kim’s revelation was supported by Lim Jong-in, a professor at the Korea University Graduate School of Information Security, who said the North’s cyber power capabilities had grown exponentially in recent years and surpassed South Korea’s.

Lim added:

“It’s ranked within seventh globally when it comes to hacking and cyber operations. Cryptocurrency exchanges, which have far weaker security features than most large banks and financial institutions, are vulnerable to such attacks.”

Aside from being suspected of involvement in the 2014 Sony Pictures hack and the $81 million theft from the Bangladeshi central bank, North Korean hackers are also believed to be behind the hacking attack on South Korean cryptocurrency exchange Youbit in December last year. Some 4,000 Bitcoins were hijacked during that breach.