New Jersey's Attorney General Freaks Out About Proof-Of-Concept Bitcoin Mining App; Issues Ridiculous Subpoena

from the overreach dept

Just last month, we wrote about how some hackers have moved on from installing malware to send out spam or to keylog your bank account info, to pushing hidden Bitcoin mining software instead, using up spare processing power on unsuspecting users' computers, hoping to build big enough Bitcoin mining networks to actual score some Bitcoins. While this particular practice is both illegal and shady, we did note that it wasn't difficult to envision perfectly legal and useful variations on this, in which users consented to allowing their spare cycles to be used this way, just like various other distributed computing projects like the classic SETI@Home project.

Apparently, at a hackathon back in November, some MIT students hacked together a proof-of-concept version of this kind of thing called Tidbit. As the EFF explains:

Tidbit uses a client's computer to mine for Bitcoins as an alternative to website advertising: in exchange for removing ads from a website, a user would give some CPU cycles to mine for Bitcoins instead. Tidbit was clearly presented as a proof of concept, with the developers making clear the code was configured not to mine for Bitcoins. That's because in addition to refining the code, they needed to work out the legal details, like drafting a terms of service, and the ethical details, like making sure there was a way for users to opt-in to the service so their computers weren't being used to mine Bitcoins without their knowledge. Tidbit won the Node Knockout award for innovation and the students thought they were on their way to continuing with their project.

Again: it was a proof of concept that couldn't actually mine Bitcoin, and the developers were working on ways to make sure that it was only useful for legitimate purposes before releasing the software. But, it appears that New Jersey's grandstanding acting Attorney General John Hoffman (who has gone after some app makers who had installed secret Bitcoin miners with apps), along with Deputy Attorney General Glenn Graham, suddenly decided that this proof-of-concept software must be illegal as well, and sent over a ridiculously overbroad subpoena. EFF is now helping the developers fight that subpoena.

As EFF explained in a letter to Graham, the whole effort was ridiculous. Not only do the developers have nothing at all to do with New Jersey, but the code is just a proof of concept and isn't being used for any actual Bitcoin mining -- and the whole point was to use it with consent for legal purposes. New Jersey sent back a somewhat obnoxious letter, basically saying, "screw you, we're New Jersey, you must respond to the subpoena."

Tidbit, with the help of EFF, has now filed a motion to quash the subpoena. Yes, Bitcoin is an emerging field right now, and the regulations around it are a bit up in the air. But there's no way to look at this other than as a massive overreach by politicians in New Jersey who have suddenly decided that any Bitcoin mining app must be up to no good. Hopefully the courts recognize that this is just a massive overreach on several different levels.

Filed Under: bitcoin, bitcoin mining, business models, mit, new jersey, tidbit
Companies: eff