Headmaster fired after stealing electricity to mine cryptocurrency

The nine machines, running 24 hours a day began to strain the school's electricity system. Photo / Supplied

The headmaster of a Chinese high school was fired after stealing electricity from the school to mine cryptocurrency, local media reported.

Lei Hua deployed eight ethereum mining machines in the school for about a year, racking up an electricity bill of 14,700 yuan ($3140), according to an article published online by a state-owned radio station in Hunan, the central Chinese province where the school is located. Last month Lei was dismissed from his post after the power theft was detected, the report said.

Calls made to the local county police station on Friday were not answered. Efforts to contact the high school were also not successful.

Cryptocurrency mining is the process whereby new coins are offered as a reward for building and maintaining the public ledger of every transaction that has taken place for cryptocurrencies, like bitcoin and ethereum. Such activity, requiring high end computing power, is usually undertaken by specialised computing chips that consume large amounts of power.

Lei started mining ethereum at his home in June 2017 after he paid about 10,000 yuan ($2132) to buy his first mining machine, which consumed nearly 21 kilowatt-hour of electricity per day, according to the report. In order to save money on his power bill, Lei soon relocated the machine to his school and subsequently installed another seven mining computers in the school's computer room over the period of a year.

A school employee had reported the unusually high electricity consumption to Lei, but he responded by blaming it on the overuse of air conditioners and heaters, according to the report.

In January Lei's deputy headmaster also began mining ethereum using the school's power supply after buying one machine with Lei's help. The report said the county government's discipline watchdog has seized the cryptocurrency earnings of both teachers, but the amount was not specified.

China has played a dominant role in cryptocurrency mining and is home to some of the world's biggest creators of mining hardware, such as Beijing-based Bitmain, which is planning an initial public offering in Hong Kong. But since the start of this year, Chinese authorities have moved to curb mining operations amid an overall crackdown on cryptocurrency trading to avoid potential financial chaos.

In April police arrested six individuals in northern Tianjin for stealing electricity from the local grid to power 600 bitcoin mining machines, state news agency Xinhua reported at the time.

Headmaster Lei's side job may not have been that lucrative after all. Amid wider bearish sentiment in cryptocurrencies, ethereum prices have plunged over 70 per cent from their peak in February, currently trading at around US$210, according to data from CoinMarketCap.

- South China Morning Post