Malaysia loses over $100 million to illegal crypto mining, power grid may collapse

Malaysia is losing millions to illegal crypto mining as underground operators exploit lax regulations and steal electricity to fuel their covert operations. With the global crypto mining market projected to hit $5.13 billion by 2025, the country risks missing out on a lucrative industry unless it cracks down on unauthorized mining and establishes clear policies.

A recent report by the Access Blockchain Association of Malaysia reveals that illegal crypto mining has cost the national power provider, Tenaga Nasional Berhad (TNB), a staggering 441.6 million Malaysian ringgit ($104.2 million) in stolen electricity since 2020. The losses highlight a growing illegal crypto mining crisis, where unlicensed miners bypass metered connections, overloading power grids and evading taxes.

Malaysia’s crypto mining dilemma: Lost revenue vs. untapped potential

While illegal crypto mining runs rampant, Malaysia’s legal mining sector remains hesitant. Medium and large-scale miners operate discreetly, fearing sudden regulatory changes, cyberattacks, or even physical theft of their equipment. The report says the lack of a clear legal framework has forced legitimate players into the shadows, stifling potential growth.

“Formalizing this activity would transform stolen energy into legitimate revenue for TNB and generate taxable income for the government,” the report states. If Malaysia can regulate even a fraction of the underground operators, it could unlock a multimillion-dollar revenue stream.

Electricity theft fuels underground crypto economy

Between 2018 and 2021, TNB reported losses of 2.3 billion ringgit due to power theft, much of it linked to illegal crypto mining. These operations often hijack electricity lines, bypassing meters to avoid detection. Authorities have conducted raids, but enforcement remains inconsistent.

Malaysia’s strategic advantages—cheap hydropower, strong internet infrastructure, and expertise in Shariah-compliant finance—make it an ideal hub for legal crypto mining. Yet, without proper regulation, illegal crypto mining continues to dominate, undermining the country’s economic potential.

Can Malaysia turn crypto mining into a regulated industry?

The report urges policymakers to introduce mining-specific licenses, green energy incentives, and stricter penalties for electricity theft. It also suggests developing Shariah-compliant mining models to attract ethical investors.

Despite the challenges, Malaysia already contributes 2.5% to 3% of the global Bitcoin hashrate, ranking 7th to 8th worldwide. Companies like Hatten Land are exploring partnerships for legal mining farms, signaling growing interest in above-ground operations.

However, until Malaysia establishes a clear regulatory framework, illegal crypto mining will keep draining resources, leaving the country on the sidelines of a booming industry.