Tesla Falls Prey to “Cryptojacking”
Another day, another crypto hack. This time, however, it’s not coins that were stolen, but computing space. Staring down the barrel was Tesla Inc (NASDAQ:TSLA), and what we have here is a classic case of “cryptojacking.” Although the recent Tesla cloud hack did not affect consumer data, it has sounded the alarm for average investors.
How can a huge company like Tesla fall victim to a coordinated hack like this one? If Tesla’s computers aren’t safe, whose are?
Wait, let’s calm down and understand what actually happened before we jump to conclusions.
Cryptojacking is hijacking computing servers for mining cryptocurrencies. It’s loosely a form of hacking in which the hackers are not intruding in your computer to steal your data (although that could be a side effect). The real motive behind cryptojacking is to gain access to your computer’s processing power.
A quick heads up for those who are new to the concept of cryptocurrency mining: it’s a capital-intensive job. It requires a lot of electricity and heavy-duty hardware. To give you an idea, an average home computer trying to mine Bitcoin today would probably go up in smoke within minutes.
This is why cryptocurrency mining is being taken over by organized fully-dedicated crypto miners running expensive rigs in cold parts of the world. This is no science fiction.
Take the example of Genesis Mining, ostensibly the largest cryptocurrency mining company in the world. The company has set up huge mining facilities crammed with high-functioning computers in Nordic countries where green energy is abundant and electricity is cheap. The company mines a variety of cryptocurrencies.
Cryptocurrency mining is simply the process of solving the complex mathematical code that validates cryptocurrency transactions. Miners get rewarded for this job that keeps the network running. The rewards are the coins that they unlock upon successfully solving codes.
Crypto mining is becoming a lucrative business as cryptocoin prices skyrocket. But not everyone can afford to achieve the economies of scale to break even.
This is why crooks are turning to cryptojacking, that is, gaining access to powerful servers where they can set up their remote mining operations and mine coins without the owners of the servers knowing. They get to mine at the victim’s expense, without paying a penny.
This is exactly what happened with Tesla. One of Tesla’s cloud servers got temporarily breached by hackers. However, the company rectified the problem within minutes and confirmed that no consumer data or private company information was stolen.
Tesla is not the only large enterprise to have faced cryptojacking. Last year, British insurance company Aviva plc (NYSE:AVV.CL), (OTCMKTS:AVVIY) became a victim of cryptojacking. Nonetheless, Tesla’s hacking incident has certainly alerted big corporations to set up stricter firewalls in order to keep out this new breed of hackers.
Although the news of the Tesla hack did not do any harm to the stock price (and it shouldn’t), bears continue to pound the stock, which is why the stock has so far failed to break past the $400.00 mark.
Chart courtesy of TradingView.com
Tesla stock bulls have been waiting for the stock to make an aggressive move after the company reportedly ramped up production of “Model 3” vehicles above 1,000 per week. (Source: “Tesla Model 3 Tracker,” Bloomberg, last accessed February 21, 2018.)
However, Tesla stock hit a speed bump after reports that the company is still tirelessly negotiating with China to allow it to produce cars independently. Currently, the Chinese government requires all foreign carmakers to partner with local Chinese companies for domestic production. Tesla is looking to cut a deal that would create an exception for it. Investors are currently awaiting the Chinese government’s final decision.
Regardless of the momentary hiccups here and there, Tesla has largely delivered on its promises (eventually). The company’s next big objective to meet is profitability, which should be achieved as the company continues to scale its business. We remain bullish on TSLA stock in 2018.