Illegal Crypto Mining Becomes an Energy Security Threat Across Southeast Asia

Malaysian law enforcement has successfully raided another illegal Bitcoin mining operation in the northeastern districts of the country, seizing 45 mining devices valued at over $52,000. Police estimates indicate that the illegal miners were causing monthly damages to the national power grid amounting to approximately $8,342, highlighting the scale of this growing energy security problem in the region. Against the backdrop of a UN report linking crypto mining to money laundering and the consequences of China’s mining ban, this case illustrates how Southeast Asia is becoming a new hub for illegal cryptocurrency production.

Raid Details: Coordinated Operation in Two Districts

According to local news outlet Malay Mail, police conducted a coordinated operation in the Hulu Terengganu and Marang districts, located in the northeast of the country. The raids on two separate premises resulted in the confiscation of 45 Bitcoin mining machines worth approximately $52,145 (RM225,000), alongside other equipment.

Terengganu police chief Datuk Mohd Khairi Khairuddin stated that the illegal electricity consumption was costing Tenaga Nasional—Malaysia’s only electricity provider—around $8,342 (RM36,000) in monthly losses.

“The syndicates behind the illegal mining operation are believed to have operated from residential and commercial properties, using electricity from the local grid illegally,” Mohd Khairi noted in his statement. The operation was carried out in collaboration with Tenaga Nasional Berhad’s (TNB) Special Engagement Against Losses (SEAL) unit.

Interestingly, no arrests were made during the raid itself, but all seized items were taken to the appropriate district police headquarters for further investigation. This may indicate that the farm operators were warned about the raid or were using remote management of the equipment.

It’s important to note that Bitcoin mining itself is legal in Malaysia. However, tampering with the grid’s electricity connectivity is punishable by up to five years’ imprisonment and/or a fine of up to $21,500 (RM100,000), making illegal power connections a serious offense.

Problem Scale: Billion-Dollar Losses for Malaysia’s Economy

The case in Terengganu and Marang represents just the tip of the iceberg in Malaysia’s growing energy security problem. According to a statement made by Akmal Nasrullah Mohd Nasir, the country’s deputy energy transition and water transformation minister, in July 2024, illegal crypto mining has cost the country at least $722 million (RM3.4 billion) in electricity costs between 2018 and 2023.

This enormous sum is equivalent to the annual budget of some social programs in the country and could have been directed toward infrastructure development or healthcare. Moreover, unregulated electricity consumption creates additional strain on power grids, leading to power supply disruptions and affecting the quality of life for ordinary citizens.

“Illegal crypto mining presents a triple threat to the country: economic losses due to electricity theft, security threats from fire risks and grid overloads, and the potential for this activity to be used for money laundering and financing criminal organizations,” comments Zulhisham Ismail, an energy security expert from the National University of Malaysia.

In February of this year, the reality of the security threat was vividly demonstrated when an explosion in Bandar Puncak Alam city revealed a nine-rig illegal Bitcoin mining operation. Such incidents are not uncommon, as illegal miners often ignore basic safety measures when modifying electrical networks.

Regional Context: Aftermath of China’s Ban

The problem of illegal cryptocurrency mining extends far beyond Malaysia and is becoming a serious challenge for the entire Southeast Asian region. A 2025 report from the United Nations Office on Drugs and Crime (UNODC) highlighted that international criminal groups operating in the region are attracted to Bitcoin mining as it allows them to circumvent anti-money laundering laws compared to more traditional forms of crime.

A Bloomberg analysis from last year indicated that China’s decision to ban Bitcoin mining in 2021 may have helped to push this type of illegal activity into Southeast Asia. After the mining ban in China, many operators moved their activities to neighboring countries where regulation is less strict and electricity is relatively cheap.

“We’re observing a classic balloon effect: when regulation tightens in one place, the problem doesn’t disappear but simply moves to where control is weaker,” explains Janet Hu, a researcher at the Asian Institute of Cryptoeconomics. “After the Chinese ban, many miners relocated to Kazakhstan, Russia, and Southeast Asian countries, including Malaysia, Thailand, and Vietnam.”

Neighboring Thailand has also had its fair share of high-profile crypto mining crackdowns. The most significant case occurred earlier this year when an operation involving 1,000 machines was discovered, estimated to have stolen $3 million worth of electricity from the national grid.

Fighting Illegal Mining: Challenges and Solutions

Combating illegal cryptocurrency mining is a complex task requiring cooperation between various government agencies, energy companies, and international organizations. In Malaysia’s case, the successful raid in Terengganu and Marang was conducted through joint efforts of the police and Tenaga Nasional’s specialized SEAL unit.

“Effective countermeasures against illegal mining require a multi-faceted approach,” believes Raja Azlan Shah, a former officer of Malaysia’s cybersecurity commission. “This includes improving energy consumption monitoring technologies, strengthening penalties for electricity theft, raising public awareness, and creating mechanisms to legalize mining activities.”

Some experts suggest developing special tariffs for cryptocurrency miners, which would allow transferring some illegal operations into the legal field and provide additional revenue for energy companies. Others advocate for a complete ban on mining, as China did, but experience shows that such bans often only relocate the problem rather than solving it.

In any case, the latest raid in Malaysia emphasizes that illegal cryptocurrency mining remains a serious problem requiring constant attention from law enforcement and energy companies. As the value of Bitcoin and other cryptocurrencies increases, the economic incentives for illegal mining will likely only grow, requiring more innovative and effective approaches to addressing this issue.