Malaysian authorities have launched a major offensive against illegal Bitcoin mining operations, revealing staggering losses of about $1.1 billion in stolen electricity from the state utility, Tenaga Nasional Berhad (TNB). The crackdown follows the discovery of nearly 14,000 illicit mining sites over the past five years, with incidents surging sharply in recent months.
Multi-Agency Taskforce Takes Charge
In response to the escalating crisis, the Malaysian government formed a dedicated cross-agency taskforce last month. This unit coordinates efforts between the finance ministry, the central bank Bank Negara Malaysia, and TNB to dismantle rogue cryptocurrency mining networks. By early October, authorities had already recorded around 3,000 power-theft incidents directly linked to illegal mining activities.
While Bitcoin mining is legal in Malaysia if operators pay for electricity and taxes, illegal miners bypass the system. They deploy powerful computer “rigs” that perform trillions of calculations to earn coins, but they typically siphon off electricity to run these energy-intensive setups.
High-Tech Hunts and Clandestine Operations
The battle between authorities and miners has turned into a technological cat-and-mouse game. Enforcement teams are employing drones to scan industrial areas and abandoned buildings, looking for unusual heat signatures from hidden machines. On the ground, police use handheld sensors to detect abnormal power consumption patterns. Tips from residents about strange, constant noises have also led to discoveries of miners attempting to mask their machinery's roar.
Illegal operators have grown increasingly sophisticated to evade capture. They frequently relocate between empty shop lots and deserted houses. To hide their activities, they use heat shields to conceal equipment glow and fortify entrances with CCTV cameras, heavy-duty locks, and even broken-glass deterrents.
A Volatile Market and Systemic Risks
Deputy Minister of Energy Transition and Water Transformation, Akmal Nasrullah Mohd Nasir, highlighted the inherent challenges. “Even if you run it properly, the challenge is that the market itself is very volatile,” he stated. “I don’t see any well-run mining that can be considered as successful legally.”
He further warned that the threat goes beyond mere theft. “The risk of allowing such activities to happen is no longer about stealing. You can actually even break our facilities. It becomes a challenge to our system,” Akmal explained, underscoring the physical danger these operations pose to national power infrastructure.
Globally, Bitcoin mining is an energy behemoth, consuming more power than entire nations like South Africa or Thailand. While over 75% of global mining now occurs in the United States, Malaysia's share remains murky. The country accounted for 2.5% of the global hashrate in January 2022, though updated figures are unavailable. Notably, about 80% of Malaysia's domestic electricity is generated from coal or natural gas, a fossil-fuel dependency mirrored across the region.
The newly formed multi-agency committee signals Malaysia's resolve to protect its energy grid and state revenue from the costly scourge of cryptocurrency-related electricity theft.
