Malaysia’s national utility firm Tenaga Nasional lost more than $1 billion (€860 million) from illegal power use by cryptocurrency miners between 2020 and August this year, the country’s energy ministry said earlier this month.
Malaysian police have conducted several raids on suspected sites since January, as part of a multi-agency operation with energy regulators and anti-corruption officials to tackle electricity theft linked to crypto mining.
Tenaga Nasional said in a report to parliament this month that it had detected 13,827 establishments suspected of being illegal crypto mining sites.
“These activities not only jeopardize user safety, but also threaten the country’s economic stability, increase public safety risks… and pose a serious threat to the national energy supply system,” the public utility said in a statement.
China was once the world’s largest site for crypto mining, an energy-intensive process that uses powerful computers to solve complex mathematical puzzles to validate cryptocurrency transactions and earn new digital coins as a reward.
But when China’s government banned the practice in 2021, citing threats to the country’s financial stability and energy conservation, many Southeast Asian countries moved quickly to welcome back miners fleeing the crackdown in hopes of monetizing cheap power and attracting new investment.
Most notable was Laos, an energy-rich landlocked state, which launched a public-private pilot program in 2021 allowing a handful of companies to mine and trade cryptocurrencies using surplus hydropower.
gathering Storm
The atmosphere over crypto mining has deepened in recent months as China and the United States have increasingly targeted Southeast Asia’s vast cyber scam industry, which is apparently closely linked to cryptocurrency exchanges and miners.
At the same time, Southeast Asian governments have found that the promised windfall from hosting miners has largely failed to materialize, while the costs of strained power grids and climate goals are rising.
Last month, the Lao government announced that it would shut down its crypto mining program after poor results and stop supplying electricity to miners until the first quarter of 2026.
This was due to the lack of broader economic spillovers – such as jobs and local supply chains – as well as crypto miners consuming too much energy during the dry season, when hydropower production falls.
“Crypto does not create value compared to supplying it to industrial or commercial consumers,” Deputy Energy Minister Chanthaboun Soukalon told Reuters last month.
In March, Thailand’s Central Bureau of Investigation seized dozens of illegal crypto mining machines that were hidden in abandoned houses near the capital Bangkok. Officials estimate that the stolen electricity caused approximately $327,000 in losses to the state utility.
Last week, Malaysia’s Ministry of Energy Transition and Water Change said it had established a multi-agency committee to address the growing problem of power theft linked to crypto mining.
Economic and energy costs increase manifold
“Illegal activities, whether crypto mining or not, should definitely be cracked down on,” Qiang Tang, associate professor at the School of Computer Science at the University of Sydney in Australia, told DW.
However, he said the problem was illegal electricity use or theft, not crypto mining, which is not illegal in most Southeast Asian countries. “I think the focus should be more on the real issue, such as how to improve electricity supply chain security in those countries,” he said.
Saidal Razalli Azuhari, a telecommunications expert at the University of Malaya, believes the $1 billion loss figure is probably the lower limit of the electricity stolen by crypto miners in Malaysia.
“This number covers only those premises that were actually found and inspected, and does not include unidentified sites or those with long-term damage to transformers and cables,” he told DW.
Because many cryptocurrencies, notably Bitcoin, have a hard-coded limit on their supply, their networks undergo “halving” events, when the issuance of new coins is sharply cut off, reducing profits for crypto miners.
The last “halving” occurred in April 2024. After such an event, “mining only makes sense if your electricity is extremely cheap or stolen,” Azuhari said.
This may explain why some experts believe that the incentive to steal electricity for mining has increased since last year.
But it is not just the economic cost that worries Southeast Asian governments.
In Malaysia, about 80% of domestic electricity is generated from coal or natural gas. Region-wide, fossil fuels still account for about three-quarters of the electricity mix, according to the International Energy Agency.
“Governments are becoming uncomfortable with scarce, mostly fossil-fuel electricity being used for illegal Bitcoin mining,” Azuhari said.
tells scam
All this comes amid a major global crackdown on cryptocurrency-fueled “pig slaughter” scams and the giant scam compounds in Southeast Asia that run them.
By some estimates, the illegal cyber-fraud industry in the Mekong region generates revenues equal to about one-third to almost half of the combined formal economies of Cambodia, Laos, and Myanmar.
A report by the United Nations Office on Drugs and Crime in April reported that transnational criminal groups from Southeast Asia were rapidly expanding their operations around the world, using illegal crypto mining as a “powerful tool” to launder billions in illicit income.
Earlier this month, the U.S. government announced the creation of a new Scam Center Strike Force to combat the rise in cryptocurrency-investment fraud by international criminal organizations operating out of Southeast Asia, which are defrauding Americans of approximately $10 billion annually, the Justice Department said in a statement.
It said the US has already seized and seized more than $400 million in cryptocurrencies and announced forfeiture proceedings to return an additional $80 million to victims.
In October, the US and Britain imposed historic sanctions on Cambodian conglomerate Prince Group, which they accused of operating forced labor scam complexes across Southeast Asia and laundering income through casinos, real estate and cryptocurrency.
U.S. authorities seized nearly $15 billion worth of Bitcoin originally from Cambodian and Prince Group CEO Chen Ze, in what prosecutors called the largest seizure operation ever.
Chen, who has worked as an adviser to Cambodia’s ruling family, was also convicted of wire fraud and money laundering charges.
As Laos’ U-turn and Malaysia’s actions show, Southeast Asia is moving toward a more skeptical, regulation-heavy approach to crypto — one that treats electricity as a strategic resource, and asks whether anonymous server racks really deserve pride of place on the fragile, fossil-fuel-laden power grid.
Edited by: Srinivas Majumdaru