Complex interplays are pushing up the price of cryptocurrencies — including the potential for criminals to profit
Flagstaff, Arizona. Wakulla County, Florida. Virginia, New York, Louisiana, and Oklahoma. All have been hit by crippling ransomware attacks recently — and U.S. senators last month called on the Department of Homeland Security to step in to help state and local governments survive the aftermath.
Ransomware attacks may represent a problem beyond shutting down local and state services, though. Cybersecurity company Emisoft believes that the value of bitcoin — which was used in 98% of all ransomware payments in the first three months of 2019 — is being bolstered by such attacks.
Victims choosing to pay up when they’re attacked are pushing up demand for bitcoin, which nudges up the price as a result, encouraging speculators into the market, according to Emisoft’s analysis. The firm points to examples like the 2017 WannaCry attack, which infected more than 300,000 computers worldwide, asking them to pay a ransom into a specific bitcoin wallet, as case studies of how specific incidents have increased the value of bitcoin.
Just before the attack raced around the world, bitcoin was trading at around $1,845. Two weeks later, having made headlines, it was at $2,446. In May 2019, just before a spate of attacks struck U.S. cities, bitcoin was trading at around $5,350. Today, the value has doubled.
“There appears to be a correlation between high-profile ransomware incidents and bitcoin prices rising,” says Brett Callow, an Emisoft spokesman.
But correlation does not always mean causation, warn cryptocurrency experts. “Every trade affects the price of bitcoin in small or large ways. Maybe not individually but definitely in aggregate,” says Marie Vasek, a lecturer in information security at University College London. And while the preponderance of ransomware attacks may have had an impact on the price of bitcoin, Vasek doubts it’s the only reason. “Because it’s traded so many places it’s hard to disentangle what’s moving the market,” she says.
“Ransomware may be part of it but the price of bitcoin is so volatile and has had such a dynamic range, it could be many factors combined,” agrees Alan Woodward, visiting professor in cybersecurity at the University of Sussex. Part of the reason he’s skeptical about a direct link between the two is the risk for criminals of keeping stocks of a highly volatile cryptocurrency when they could easily exchange it into more secure commodities, such as diamonds or gold.
However, it certainly appears that there is some sort of relationship between the rise of ransomware and the increase in bitcoin price. “With the commoditization of cybercrime, criminals are bringing an important income to the underground economy,” says Guillermo Suarez-Tangil, an informatics lecturer at King’s College London. “Ransomware is just one of the many elements in which criminals introduce crypto-capital.”
Suarez-Tangil and colleagues recently looked at the mining of another cryptocurrency, Monero — and found that around 4.4% of the entire circulation of the cryptocurrency available was illicitly mined by harnessing the processing power of victims’ computers without their knowledge, a volume worth several million dollars. “It’s fair to assume that all this demand would have an impact on the increase of the value,” he says.
Vasek believes that any ransomware-connected rise in bitcoin prices would be seen alongside a rise in fiat currencies, which criminals use to quickly cash out their investments to try and make it even less traceable — something which didn’t happen.
Yet Callow thinks that the price spike isn’t due solely to the rise in ransomware — but instead is down to companies and municipal councils recognizing the risk from being hit by malware. “We know a considerable number of companies hoard bitcoin in case they are hit with ransomware and need to pay a demand,” he says. (A 2018 survey shows three-quarters of companies’ information security officers have a stash of bitcoin in case they need to pay a ransom.)
“It would seem to make sense that the bigger the demands come and the more high-profile cases there are, the more companies will start to buy,” says Callow. “We suspect that that is what is driving the increase in prices, rather than the actual ransom demands themselves.”