January 11, 2019

Gresham's Law thesis is back - Malware bid to oust honest miners in Monero

7 years after we called the cancer that is criminal activity in Bitcoin-like cryptocurrencies, here comes a report that suggests that 4.3% of Monero mining is siphoned off by criminals.

A First Look at the Crypto-Mining Malware
Ecosystem: A Decade of Unrestricted Wealth

Sergio Pastrana
Universidad Carlos III de Madrid*
spastran@inf.uc3m.es
Guillermo Suarez-Tangil
King’s College London
guillermo.suarez-tangil@kcl.ac.uk

Abstract—Illicit crypto-mining leverages resources stolen from victims to mine cryptocurrencies on behalf of criminals. While recent works have analyzed one side of this threat, i.e.: web-browser cryptojacking, only white papers and commercial reports have partially covered binary-based crypto-mining malware. In this paper, we conduct the largest measurement of crypto-mining malware to date, analyzing approximately 4.4 million malware samples (1 million malicious miners), over a period of twelve years from 2007 to 2018. Our analysis pipeline applies both static and dynamic analysis to extract information from the samples, such as wallet identifiers and mining pools. Together with OSINT data, this information is used to group samples into campaigns.We then analyze publicly-available payments sent to the wallets from mining-pools as a reward for mining, and estimate profits for the different campaigns.Our profit analysis reveals campaigns with multimillion earnings, associating over 4.3% of Monero with illicit mining. We analyze the infrastructure related with the different campaigns,showing that a high proportion of this ecosystem is supported by underground economies such as Pay-Per-Install services. We also uncover novel techniques that allow criminals to run successful campaigns.

This is not the first time we've seen confirmation of the basic thesis in the paper Bitcoin & Gresham's Law - the economic inevitability of Collapse. Anecdotal accounts suggest that in the period of late 2011 and into 2012 there was a lot of criminal mining.

Our thesis was that criminal mining begets more, and eventually pushes out the honest business, of all form from mining to trade.

Testing the model: Mining is owned by Botnets

Let us examine the various points along an axis from honest to stolen mining: 0% botnet mining to 100% saturation. Firstly, at 0% of botnet penetration, the market operates as described above, profitably and honestly. Everyone is happy.

But at 0%, there exists an opportunity for near-free money. Following this opportunity, one operator enters the market by turning his botnet to mining. Let us assume that the operator is a smart and careful crook, and therefore sets his mining limit at some non-damaging minimum value such as 1% of total mining opportunity. At this trivial level of penetration, the botnet operator makes money safely and happily, and the rest of the Bitcoin economy will likely not notice.

However we can also predict with confidence that the market for botnets is competitive. As there is free entry in mining, an effective cartel of botnets is unlikely. Hence, another operator can and will enter the market. If a penetration level of 1% is non-damaging, 2% is only slightly less so, and probably nearly as profitable for the both of them as for one alone.

And, this remains the case for the third botnet, the fourth and more, because entry into the mining business is free, and there is no effective limit on dishonesty. Indeed, botnets are increasingly based on standard off-the-shelf software, so what is available to one operator is likely visible and available to them all.

What stopped it from happening in 2012 and onwards? Consensus is that ASICs killed the botnets. Because serious mining firms moved to using large custom rigs of ASICS, and as these were so much more powerful than any home computer, they effectively knocked the criminal botnets out of the market. Which the new paper acknowledged:

... due to the proliferation of ASIC mining, which uses dedicated hardware, mining Bitcoin with desktop computers is no longer profitable, and thus criminals’ attention has shifted to other cryptocurrencies.

Why is botnet mining back with Monero? Presumably because Monero uses an ASIC-resistant algorithm that is best served by GPUs. And is also a heavy privacy coin, which works nicely for honest people with privacy problems but also works well to hide criminal gains.

Posted by iang at January 11, 2019 05:01 PM
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