I can confirm the same behaviour. Ubuntu 12.10, Transmission 2.61
(13407). Downloading a torrent to a location inside an encrypted home
directory causes constant, massive CPU utilization - bringing the entire
system almost to a halt. The problem is completely mitigated (doing the
same downloads) by moving the download destination to a directory
outside your encrypted home.

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https://bugs.launchpad.net/bugs/1087071

Title:
  Transmission uses 100% CPU when downloading any file to a encrypted
  home

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