Crypto mining is big business.
Yimiao group – a blockchain technology group that mines crypto currencies and trades it to generate a profit – has mining sites in China, Singapore, Ohio and South Carolina in the USA and in Montreal in Canada.
It raises funds from investors to purchase cryptocurrency mining machines.
In October 2021, the Chinese Government banned cryptocurrency transactions in China. At about that time Yimiao decided to start mining Litecoin and Dogecoin, two of the most popular coins after Bitcoin.
Its technology of choice was the highly sought after and difficult to acquire L7Antminer – manufactured by Bitmain Technology Ltd – which is about the size of a desk top computer.
The value of such machines is not constant but fluctuates according to movements in the cryptocurrency market itself.
In late 2021 Yimiao ordered 1,606 L7 machines for which it paid nearly USD$21 million. The unit prices ranged from USD$8,000 to USD$18,000 per unit depending upon when the order was placed.
In March 2022, the company entered into a hosting agreement with Melbourne company Star Mining for the provision of hosting services at its rented warehouse in Clayton in Melbourne’s south-east.
It then arranged for most of the newly acquired Antminer L7s to be air-freighted from Hong Kong to the Melbourne site where the machines were to be gradually fired up – as housing racks were constructed – and linked to Yimiao’s mining pool accounts with ‘Poolin’.
The company had no on-site personnel at Clayton but could remotely monitor the operation and status of the machines through its Poolin dashboard.
It became concerned when of the 1,598 units on site, the number that were operational at any one time was only about 300 and sometimes all were “off-line”.
A site inspection in May 2022 revealed that most of the Yimiao Machines – which had an anticipated lifespan of just 4 years – were on pallets and still in their original packaging.
A further site visit in July that revealed very slow progress in connecting the remaining machines to power prompted the company to decide to move them to South Carolina.
But at the same time, another party with access to use the premises – 3V Development – began disconnecting the Yimiao machines and moved them to mine cryptocurrency for itself.
Yimiao brought proceedings in the Victorian Supreme Court against all warehouse occupants connected to Star as bailees for conversion and detinue.
Hundreds of machines were not able to be recovered.
Justice Richard Attiwill ruled that 3V’s sole director, Dajian Li, had directed the machines be re-configured for his mining operation and linked them to 3V’s “pool” accounts.
The court ordered 3V to pay restitution the amount of which turned on the machinery itself. The Court assessed each of the 769 missing machines to be worth $19,000 each, producing a total sum of $14.85 million in restitution.
Yimiao’s diminished mining performance at its Melbourne located machines still yielded about 5,630.33 Litecoin and 6,601,622.03 Dogecoin over the relevant period.
