$100 Million Loss: Malaysian Electric Company Hit Hard By Illegal Bitcoin Mining
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Bitcoin mining, a complex activity that requires adding data to the blockchain, has been the subject of complaints. While it’s arguably a lucrative trade for some, it impacts the local electricity grid.
Some estimates say you need up to 155,000 kilowatt hours (kWh) of electricity just to mine one coin, and each transaction requires around 851 kWh, equivalent to one month’s electricity supply for an average household in the US.
Bitcoin mining’s threat is global, with many national and local economies feeling the pinch. For example, Tenaga Nasional Berhad, Malaysia’s national electricity provider, has reported losses of more than 440 million Ringgit (about $101 million) due to mining-related electricity theft. This figure is on top of the reported confiscation of electrical items related to Bitcoin mining valued at $500,000.
Local Reports Say Theft Has Affected TNB For Years
A report from The Star says that Tenaga Nasional Berhad has been bleeding from Bitcoin mining-related thefts since 2020. According to Comm Datuk Seri Mohd Shuhaily Mohd Zain, the company suffered from increasing losses year-on-year.
The director added that in 2020 alone, the company lost RM5.9 million, which increased to RM140.4 million the following year. Then, in 2022, the losses hit RM124.9 million; in 2023, they grew to RM67.1. This year, the losses are at RM103 million and counting.
As of today, the market cap of cryptocurrencies stood at $2.4 trillion. Chart: TradingView.com
Bitcoin Mining Continues To Impact Local Supply
TNB and the local authorities claim that the losses go back to 2018 and have connection to illicit mining operations. TNB said in another separate paper that their losses between 2018 and 2023 totaled more than $755 million.
Although crypto mining only accounts for a small portion of Malaysia’s total consumption, it has a substantial financial impact. Aside from TNB’s losses, over $500,000 of electrical equipment linked to illicit mining operations have been confiscated.
The government’s seizure of these electrical items is part of Malaysia’s campaign on tax evasion involving different parties involved with cryptocurrencies. Malaysia’s Criminal Investigation Unit plans to investigate the thefts and factors contributing to the increasing loss trend.
How Does Bitcoin Mining Affect Electric Companies?
Bitcoin mining is a complex activity that involves adding new data to the blockchain but requires extensive power. In exchange for Bitcoin, an individual or a firm must solve a complex mathematical problem in order to “mine” or acquire bitcoin.
However, experts say that this process requires a large amount of computational power and energy. In many countries like Malaysia, the requirement of a substantial electrical supply often tempts people to skirt payments and commit crimes.
Featured image created using Dall.E, chart from TradingView
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