Chilean Drug Trafficking Ring Was Also Mining Bitcoin: Report

A routine drug bust got a surprising cyber twist in Chile when the country’s investigative police unit (PDI) found the suspects were not only trafficking in illicit substances, but were also running a full-blown Bitcoin mining operation.

Local media outlet El Mostrador reported that on September 6, the Anti-Narcotics Brigade for Santiago’s Metropolitan Region Southern Area descended on a property in the capital city of Santiago, situated in a neighborhood called La Cisterna. It was the third operation against the group, and according to the report, law enforcement discovered and seized 36 kilos of marijuana, a printing press for ecstasy pills, 43 grams of ketamine, and an unexpected computer set up.

Police said they found a series of machines interconnected and plugged in, emitting large amounts of heat and noise in one of the property’s rooms. Authorities on site called the Cybercrime Brigade, who confirmed that it was a BItcoin mining operation.

“This is an unprecedented event,” Eduardo Gatica, head of the Anti-Narcotics Brigade, told El Mostrador. “This is the first time drug trafficking has been linked so directly to cryptocurrency mining.”

Bitcoin mining is a core component of the cryptocurrency network. Specialized computers known as ASICs draw from a plethora of energy sources to join a global competition to find a specific random number. On average, every ten minutes, one computer finds the number and is allowed to add the newest block of transactions to the Bitcoin blockchain.

Currently, a Bitcoin miner receives 6.25 BTC for each block they add to the chain–worth about $27,210 as of this writing.

According to El Mostrador, police seized 19 of the mining machines, although only ten were up and running.

The reason only some of the machines were running was because the local electrical grid could not support all 19 machines to be mining simultaneously, said Luis Orellana, Chief of Santiago’s Cyber Crime Unit.

Authorities in the Metropolitan Region suspect the sophisticated mining setup was for money laundering purposes, although they noted that crypto mining is not an illicit activity. Police allege the now-detained criminals were purchasing machines with income from their drug trafficking, funneling it into their computing operation, and then swapping Chilean pesos for BTC.

Referring to the connection between the illicit activities and Bitcoin mining, Prosecutor Carlos Yáñez Díaz of the Metropolitan Region’s High Complexity and Organized Crime Office called it “a novel” method.

This isn’t the first encounter authorities have had with cryptocurrency and criminality in the country, El Mostrador reported. A ruthless organized crime syndicate known as the Tren de Aragua, which operates mostly in Chile’s north, was caught with $4 billion pesos (roughly $4.5 million dollars) in digital assets.

Chile’s Investigative Police Unit could not immediately provide comments to Decrypt.

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