MIT student settles legal fight with NJ over bitcoin-mining experiment

Two Bitcoins

An MIT student who butted heads with New Jersey regulators over an online bitcoin-mining experiment has finally settled the case after a year and a half of legal wrangling.

As part of the settlement, engineering student Jeremy Rubin will not have to pay a $25,000 fine as long as the software he helped develop doesn’t improperly access computers in New Jersey.

That shouldn’t be a problem — the code in question, which was developed as part of a hackathon in November 2013, never grew beyond the proof-of-concept stage and its former website is no longer functional.

“A friendly inquiry and a nudge to be sensitive to user policy would have been appropriate and sufficient for a student project,” Rubin wrote Wednesday.

Rubin’s case, which became a flashpoint for prominent figures in the technology and educational research fields, revolved around an idea that Rubin and some friends mocked up over a weekend.

The idea — known as Tidbit — was to help online publishers bankroll their operations without using advertising, which can track a lot of information about users and crowd out web pages with intrusive ads.

Instead, Tidbit proposed a bit of code that would use some of a website visitor’s processor power to “mine” for bitcoin, the digital alternative currency.

Bitcoin mining happens when computers solve complicated math problems, which are used as a kind of password to verify transactions between people transferring money on the bitcoin system. Computers that successfully solve those problems are rewarded with bitcoin.

By spreading that bitcoin mining work across many computers, the idea went, website visitors could allow their computer processors to contribute to the mining efforts and help pay for the free stuff they’re viewing.

Not long after the hackathon, New Jersey privacy regulators sent a subpoena to Rubin, looking for the Tidbit source code, bitcoin “wallet” addresses that it had used, and more information.

That riled up academics and tech-policy experts, prompting MIT’s president to get involved. The Electronic Frontier Foundation represented Rubin in the case for no cost.

As part of the settlement, Rubin wrote, he had to provide New Jersey regulators with the URLs of two websites that had used the Tidbit code in New Jersey.

In their statement on the case, New Jersey officials said they didn’t aim to stifle entrepreneurship or technical innovation. But they maintained that the Tidbit code had been used to access some New Jersey-based users’ computers without warning them first.

Rubin noted that the settlement doesn’t include any admission that Tidbit did anything “unfair or deceptive,” or violate New Jersey laws.