In a recent series of crackdowns on illegal cryptocurrency mining operations, Malaysian authorities have seized 171 cryptocurrency mining servers in the town of Miri on the island of Borneo. This growing problem of electricity theft for cryptocurrency mining has prompted energy suppliers and law enforcement agencies to address the issue more rigorously.

The discovery of a covert mining operation in Miri was made possible thanks to a tip-off from the public, emphasizing the importance of community involvement in combating such illicit activities. Spearheaded by Sarawak Energy, the operation resulted in the seizure of 34 cryptocurrency mining servers that were illicitly tapping into the local grid and utilizing approximately 6,000 Malaysian ringgits ($1300) worth of stolen electricity each month.

This incident is not an isolated case. Recently, authorities in the state of Senadin seized an additional 137 servers involved in similar activities. The increase in such illegal mining operations has placed significant strain on energy providers and law enforcement agencies, leading them to intensify efforts to counteract these activities effectively.

These illegal cryptocurrency mining operations have emerged against the backdrop of a bearish market for Bitcoin (BTC) miners, compelling many operations to sell BTC in record amounts to sustain their businesses. This heightened competition within the mining ecosystem, combined with the upcoming Bitcoin halving in April 2024, raises concerns that smaller operators without economies of scale may struggle to remain profitable.

Additionally, the record-high levels of Bitcoin’s network difficulty have further complicated matters for miners, making it increasingly challenging for them to earn rewards. Experts estimate that mining one BTC could cost companies more than $30,000, while the current reward of 3.125 BTC (approximately $92,000 at the time of writing) may not be sufficient for some operators to cover their expenses.

With Malaysia offering relatively low electricity prices, illegal mining operators are attracted to stealing power from the grid, eliminating electricity running costs and maximizing profits. However, these activities are considered serious offenses under Malaysian law, carrying penalties of up to RM100,000 and/or five years’ imprisonment if found guilty.

Authorities are taking a proactive approach to combat electricity theft, with Sarawak Energy employing meter inspection teams and advanced tools to detect illegal operations. The utility company also relies on the vigilance of the public to uncover suspicious activities, encouraging locals to report any such incidents to their customer care center.

Efforts to curb illegal cryptocurrency mining through stolen electricity are crucial for maintaining the integrity of the power grid and preserving fair competition within the industry. By cracking down on these illicit activities, Malaysia aims to create an environment that promotes legitimate and sustainable crypto mining operations.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.