It's called a DGA or domain generation algorithm, I believe Conficker was one of the first botnet's to use this approach about 10 years ago, it's pretty standard trade craft nowadays.
Well this is slightly different. DGA seems to actually use it as a rendez-vous host, whereas in this case, it literally is a dummy domain that they didn't even bother registering, with the only purpose of checking if they were in a VM. In which case, generating any long hash domain would most likely not be registered and would do the job.
