Coinbase’s compliance office is seeking to acquire operational information from bitcoin mining companies in a process that some of the sector’s businesses are framing as an infringement on their trade secrets.
MegaBigPower (MBP) and Bitmain report that Coinbase has asked for detailed information regarding their mining facilities, requesting time-stamped photographs and videos of mining facilities and details about the origin of the hardware the companies operate.
An email dated 25th March sent to MBP owner Dave Carlson and obtained by CoinDesk stated:
“As a followup to our previous inquiry, we need to conduct some additional due diligence. Towards that end, please complete and return the due diligence questionnaire attached to this email, and provide us with verifiable time-stamped images of your mining equipment and key infrastructure elements at your facility.”
The Coinbase representative went on to state that Carlson could be provided with a secure Dropbox to transmit the information.
“Quite a lot of this information is competitively private information,” Carlson told CoinDesk.
Carlson said that his company has not used Coinbase in a significant capacity since last summer, though he said that MBP maintains a small account with “about half a bitcoin” deposited in that wallet.
Carlson went on to speculate that Coinbase was facing pressure from regulators to gather such information, or that it was seeking details about bitcoin mining for business purposes.
When asked why Coinbase sought this kind of information regarding client mining activities, as well as how the information was relevant to company’s service, a spokesperson told CoinDesk:
“The reason we ask for this information is for consumer protection.”
A questionnaire sent to MBP and provided to CoinDesk included a variety of requests for details about the purchase of hardware components, chip foundry contracts, customer payout receipts, and recent utility bills for its mining facility, among other items.
According to Bitmain’s Yoshi Goto, the company received a similar inquiry in the past, which included a request for time-stamped photographs and videos of hardware. Goto went on to suggest that Coinbase has sought such information from other mining companies that use its services.
“It is not something new that they started to do this,” he told CoinDesk in an email.
Goto confirmed that Bitmain provided the requested information and said that the request was “a bit too invasive to the point it would cut into our corporate secrets”.
“I don’t think they are doing a blanket mapping of all the mining operations in the USA,” Goto added.
New York-based mining company CoinMiner, which is a member of MBP’s franchisee program, told CoinDesk that it received a generic request for information a day after MBP received its first email.
Together, the companies are representative of a significant portion of the large, public-facing companies mining bitcoin in the United States.
Images via Coinbase, Shutterstock