Malaysia Loses $1.1 Billion Due to Crypto Mining Electricity Theft

The Malaysia national utility company, Tenaga Nasional Bhd (TNB), has suffered losses exceeding $1.1 billion from illegal electricity usage by cryptocurrency miners between 2020 and August of this year, according to the Ministry of Energy.

Key Takeaways

Malaysia's national utility firm, TNB, has lost over $1.1 billion to illegal electricity usage by crypto miners since 2020.
13,827 premises have been identified as illegally drawing power for cryptocurrency mining.
A significant increase in electricity theft cases has been reported in recent years, with mining syndicates employing complex methods to evade detection.
Industry growth potential is stifled by regulatory uncertainties, with calls for clearer guidelines and licenses.

Malaysia Loses $1.1 Billion to Crypto Mining Electricity Theft

Reported by SCMP, the substantial financial losses are attributed to 13,827 premises that were found illegally drawing power to mine cryptocurrencies, primarily Bitcoin, during this time frame.

The energy ministry provided these insights in a parliamentary response recently, highlighting TNB's collaborative efforts with various enforcement agencies to address electricity theft.

While cryptocurrency mining is legal in Malaysia, activities such as tampering with electricity meters or bypassing connections contravene the Electricity Supply Act.

Enforcement Actions Uncover Widespread Illegal Mining Activities

TNB has compiled an extensive database that keeps complete records of owners and tenants at locations suspected of electricity theft for Bitcoin mining. This database acts as an internal tool for identifying and monitoring dubious sites while laying the groundwork for operational inspections.

Coordinated operations involving TNB, the Energy Commission, police, the Malaysian Anti-Corruption Commission, and local councils have successfully confiscated Bitcoin mining machines from identified locations. These combined efforts have led to the dismantling of several illegal setups, thereby protecting the stability of the national power grid.

Smart meters are being integrated into electricity distribution substations to track energy usage and detect any manipulative practices in real time. TNB is also considering leveraging artificial intelligence and predictive analytics to improve detection capabilities further. This technology would continuously analyze consumption patterns to identify any suspicious energy usage.

Alarming Increase in Electricity Theft Cases Poses Risk to Power Infrastructure

As reported by Cryptonews in June, cases of electricity theft connected to illegal crypto mining have surged by 300% between 2018 and 2024, with detected incidents rising from 610 to 2,397 during this period.

From 2020 to 2024, the average number of crypto-related electricity theft cases stood at 2,303 annually, while TNB received around 1,699 complaints related to crypto theft from January 2020 until December 2024.

“The increasing number of complaints indicates a growing public awareness regarding illicit crypto mining activities,” TNB stated.

In March, the Director of the Bukit Aman Criminal Investigation Department, Datuk Seri Mohd Shuhaily Mohd Zain, noted that TNB has incurred losses of approximately 520 million Ringgit ($121 million) due to electricity theft, with a significant proportion of these incidents attributed to illegal crypto mining.

Typically, criminal syndicates operate from rented shops, warehouses, or low-traffic residential locations, installing heavy-duty ventilation systems and soundproofing materials to avoid detection. These operations illegally bypass electricity meters by directly tapping into the main power grid, consuming electricity equivalent to entire residential blocks, and frequently relocating to evade authorities.

Industry's Growth Potential Hindered by Regulatory Scrutiny

Despite being one of the leading countries in the world in terms of Bitcoin hash rate share, Malaysia's competitive electricity rates are undermined by ongoing regulatory uncertainties.

The ACCESS Blockchain Association estimates that formalizing the cryptomining sector could lead to 700 million Ringgit in hardware and infrastructure investments in 2023, generating approximately 4,000 jobs and contributing about 150 million Ringgit in annual tax revenue.

Malaysia Loses $1.1 Billion to Crypto Mining Electricity Theft

However, there is currently no regulatory body that governs the mining process itself, leaving operators confused about electricity tariffs, licensing requirements, and environmental compliance standards.

While the Securities Commission oversees digital asset trading and custody, it does not provide a specific framework for mining operations, leading to regulatory ambiguity that keeps many legitimate operators hidden due to security concerns.

The ACCESS report advocates for the introduction of specialized mining licenses, reforming landlord liability laws, and implementing energy pricing models linked to sustainability metrics. Additionally, they suggest creating Shariah-compliant mining models to harness Malaysia's strengths in Islamic finance, emphasizing transparent governance and renewable energy in ethical mining practices.