The crackdown on Bitcoin mining in Malaysia begins in the air.
Bloomberg and the Financial Times report that drones are flying over rooftops, scanning abandoned buildings, vacant storefronts and other dead zones for strange heat signals. These hot spots most often indicate that the rig is running non-stop. On the ground, police carry hand-held sensors that detect abnormal power usage. Citizens report birds chirping throughout the night, but it is only a fake sound played from speakers to mask the roar of mining equipment behind locked doors.
Miners move quickly. They gather in one place, install heat shields to hide equipment, install surveillance cameras, and wire entrances with broken glass. They then disappear before the authorities arrive.
Over the past five years, officers have tracked down 14,000 illegal sites related to power theft. That’s what the Department of Energy said in its latest breakdown. Damage to Malaysia’s state-run power company Tenaga Nasional has reached approximately $1.1 billion and continues to rise.
By October this year alone, 3,000 new infections had already been recorded, as the price of Bitcoin rose, crashed by more than 30%, and began to rise again.
Special committee formed to track mining operators
On November 19, Malaysia launched a new task force comprising the Ministry of Finance, Bank Negara Malaysia and TNB.
Akmal Nasrullah Mohd Nasir, Deputy Minister of Energy and Water Transformation, heads the team. “In fact, it can even destroy our facilities. That would be a challenge to our system,” Akmal said Wednesday.
The rigs used by miners operate 24 hours a day, performing trillions of guesses every second. By doing so, you can verify your transactions and earn rewards in Bitcoin. It’s a race. The more guesses you make, the higher the probability. However, it also consumes a large amount of electricity.
One group has turned ElementX Mall, a half-dead shopping center overlooking the Straits of Malacca, into a full-fledged cryptocurrency farm. Malls closed during the pandemic and never recovered.
The floor is still unfinished. Wires are hanging from the ceiling. In early 2022, Bitcoin rigs filled the space. By 2025, they are gone. The entire story was revealed in a TikTok video.
More than 75 percent of mining currently takes place in the United States, according to a report by the Cambridge Center for Alternative Finance. Malaysia held 2.5 percent of the global hashrate in January 2022, but Chainaracy has not released any reports/data on it since then.
Miners occupy bankrupt shopping malls and logging sites across the country
Another group called Bityou has taken over former logging sites in Sarawak. Bitcoin mining is legal under Malaysian law. But only if they gained power legally and paid taxes. Akmal doesn’t buy it. He has participated in raids before. He has seen how these groups operate. When the task force held its first meeting on November 25, some members pushed for outlawing mining altogether.
“The challenge is that even if you manage it properly, the market itself is very volatile,” Akmal said. “I don’t see any well-run mines that are legally considered successful.”
He also believes there are signs of organized crime in the way these operations are conducted. “It’s clearly run by a syndicate from the way they move their organization from one location to another,” Akmal said. “There’s a trick to it.”