I write in response to Father Bob Hudak’s Jan. 8 letter requesting research into the “collateral damage” that occurs by inviting a data processing site such as Compute North into our community. My expertise is in the history of human trafficking, not in cryptocurrency. But a connection exists between these two “markets.”
First, let’s establish some terminology.
Cryptocurrency mining is the process of searching a digital “blockchain” for a digital equation to represent newly “discovered” virtual currency. The term “cryptocurrency miner” is confusing because the industry and the media use it as a descriptor both for the computer hardware (also known as rigs) and for people or corporations who employ the rigs. Here, the term “cryptocurrency miner” refers to an individual or company that seeks to generate virtual currency by mining the blockchain.
Sex trafficking, according to the Department of Homeland Security, is modern day slavery and involves the use of force, fraud or coercion on an adult or minor child to perform some type of sex act.
Based upon what I have learned, I strongly recommend that the Greenville City Council vote “no” on the amendment that will permit data processing facilities such as Compute North to operate within the city limits.
Compute North is a company that operates very highly specialized data processing centers (filled with hundreds of high-powered rigs) aimed at attracting cryptocurrency miners as its clients. According to Compute North’s website, the company hosts hundreds of clients ranging from major corporations to smaller retailers who seek to produce virtual currency as an alternative to legal tender.
Cryptocurrency is not evil, but evil actors gravitate toward it. Some clients in art and video gaming generate cryptocurrency for use in benign transactions. Even retailers like Walmart use virtual currency to ease their supply chain woes. Shadier clients generate or use cryptocurrency to launder money used in illegal transactions, including sex and drug trafficking.
Just last week the U.S. General Accountability Office issued a report on virtual currency and illegal trafficking. It found that most websites involved in the commercial sex market accept virtual currency as payment for sexual imagery, live virtual sex shows or sexual services by trafficked persons. One reason some websites accept virtual currency is because major credit and debit card companies cancel their contracts once their commercial sex operations become known.
Websites also accept virtual currency because buyers of sex may remain anonymous. Some retailers operate ATM-style kiosks where buyers can launder their legal tender for the purchase of sex. These kiosks permit anyone to exchange real money for virtual currency in the form of “gift cards” that allow users to anonymously purchase sex online. Because the currency operates outside the purview of the federal government, federal authorities have much less ability to track criminals who use it.
Make no mistake, I do not accuse Compute North of these illegal activities. Compute North is a legal corporation that profits off an unregulated, experimental and risky capitalist venture. But the company can’t know the motivations of its many clients, nor is it accountable for the actions of their clients and their end users. Our community, struggling itself to eradicate illegal trafficking, should not serve as its proving ground. Greenville City Council, please reject the zoning request for a company in an industry that protects illegal traffickers.
Karin L. Zipf is a Professor of History at East Carolina University.