Minnesota ‘Degen’ Accused of Stealing Power for Bitcoin Mining

A Roseau, Minnesota man was making $5,000 a month from bitcoin mining. He is now being accused of stealing electricity.

A former couple in Roseau, Minnesota has been accused in a civil lawsuit of stealing electricity to power at least 26 bitcoin ASIC miners since 2022.

Minnesota-based power company North Star filed a lawsuit on Nov. 20 against Ryan Jaenicke and Tina Fehlhaber for stealing electricity by using two unauthorized pad-mounted 50 kilovolt-ampere (kva) transformers.

North Star is a not-for-profit member-owned power distribution cooperative servicing several Minnesota counties including Roseau and Badger. The firm said in the complaint that it first noticed a significant loss of electric power in June 2022, which prompted an investigation.

During an inspection of distribution lines around May. 9, 2023, two North Star employees discovered non-North Star equipment was connected to North Star lines in Roosevelt, Roseau. That allowed electricity to flow in without a North Star meter. The employees traced the line down and found two unauthorized 50kva transformers inside a Roosevelt property.

North Star said the Roosevelt property is owned by Fehlhaber, Jaenicke’s former girlfriend who broke up with him a month ago. The company later found out Jaenicke runs a YouTube channel called “Denegerate Passive Income” where he shares his trades in real estate, crypto mining and DeFi.

Apart from the two allegedly unauthorized transformers, North Star said the employees also noticed 26 bitcoin miners in the Roosevelt property and alleged that was the cause of its line loss discovered in June 2022.

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The company disconnected the non-North Star equipment from its line and reported the incident to local law enforcement as a potential criminal case. However, when law enforcement returned to the site with a search warrant on May 25, North Star said the miners were already removed but Fehlhaber was present.

North Star did not specify the models of the alleged miners that their employees observed. However, two 50kva transformers are about enough to support 26 units of Antminer S19, which has a standard power consumption of approximately 3,250 watts.

In a March 2022 video, Jaenicke touted he was making $5,000 per month in passive income through bitcoin mining. He showed two of his small mining operations in the video in residential and commercial properties he bought, where he plugged in 11 S19 Pros at an energy rate of $0.06/kWh.

The math appears to be right. An S19 Pro has a hashcost of $0.0432/TH/s at an energy rate of $0.06/kWh. When bitcoin’s daily hashprice was around $0.19/TH/s in March 2022, one S19 Pro could generate a net profit of $0.1468 per TH/s per day. 11 units could make about $4,800 in net profits a month.

However, bitcoin’s hashprice started to plunge from $190/PH/s in March 2022 to less than $90/PH/s in June before tanking to $60/PH/s around the end of 2022. With the same group of miners, Jaenicke would have to lower his electricity cost to much less than $0.03/kWh to make the same amount of passive income after June 2022.

North Star is demanding damage compensation of at least $50,000 and the disgorgement of all the profits the defendant obtained through the alleged electricity theft.

Jaenicke couldn’t be reached for comment. The full complaint can be found here.