Bitcoin Mining and Electricity Theft a Growing Problem for Malaysian Utility Companies

Electricity theft in Malaysia by bitcoin miners cost power utility companies hundreds of millions of dollars in 2021, but one company wants to change that.

Electricity theft in Malaysia for cryptocurrency mining is quickly growing into a costly problem, but Tenaga Nasional Bhd, the local utility regulator, offered two ideas for curtailing the practice.

The newest proposal from the utility company suggests adding a special tariff imposed on Bitcoin mining operators in a bid to combat electricity theft. It also suggested that the energy regulator nudges Bitcoin miners to apply for a legal electricity supply license.

Bitcoin mining booming in Malysia

Tenaga has seen a spike in illegal cryptocurrency mining since 2018. According to President and Chief Executive Officer Baharin Din, this trend is expected to continue. Mining isn’t inherently unlawful in Malaysia, but some miners steal electricity by modifying a meter installation or bypassing the meter altogether to create an illegal connection.

Cases of theft surged from 610 in 2018 to 7,209 in 2021, reports Tenaga. “The increase in cases is a worrying trend as it affects not only the energy industry in terms of value but also the stability of the electricity supply system and public safety,” said energy and natural resources minister Takiyuddin Hassan. He says that running the mining computers with non-standard fuses and electrical loads outweighing the capacity of power cables could result in short circuits and fires. Hassan encourages citizens possessing information on suspected or actual electricity theft to bring it to the attention of the authorities for action to be taken.

Tenaga has been working with police, the Energy Commission, local municipalities, and Malaysia’s anti-graft industry to apprehend electricity thieves amongst Bitcoin miners in particular. Eighteen people have been arrested for stealing $550M worth of electricity so far.

The most recent crackdown occurred in Klang via a joint effort between Tenga and the Klang Municipal Council on March 1-2, 2022. A senior police officer said: “We carried out raids on three premises in Bandar Puteri and Bayu Perdana, arrested 12 men, and seized RM65000 worth of cryptocurrency machines.”

Fighting electricity theft with technology

Technology can also be a solution to combat this theft, says Paul Lim Pay Chuan, a senior executive at Pestech Internation Bhd, an electrical power company. Smart metering, meter data management systems, together with digital power quality products will provide valuable information on the supply and demand of power, said Chuan, enabling better monitoring, control, and planning of the whole power system. This in turn will reduce the frequency of theft.

What took place at Klang is a case in point, where Tenga’s meter readers detected the abnormalities in electricity readings. The automated monitoring of meters, plus supply and demand, could have led the authorities to move in faster.

Eleven Malaysian sites raided in 2021

In July 2021, Sarawak Energy on the island of Borneo, whose northern regions are under Malaysia and Brunei’s rule, raided a site in Miri after three homes burnt down because of $2M worth of electricity theft. Over one-thousand bitcoin mining rigs were literally steamrolled. The Miri raid was one of 11 premises raided in Malaysia in 2021.

Anyone involved in the theft of electricity by interfering with the equipment of Tenga could be fined up to RM100,000 or imprisoned for up to ten years. “These operations will be ongoing to ensure these illegal activities are curbed,” said the Klang officer.

The increase in mining activity, which is inherently energy-intensive, especially for proof-of-work cryptocurrency consensus methods, can be attributed to the exponential rise in the price of digital assets. According to the Cambridge Center for Alternative Finance, Malaysia contributes over 4.5% of the global mining power.