Malaysia loses $1.1 billion! Drones hunt down illegal Bitcoin mining electricity theft syndicates

According to Bloomberg, Malaysia is using drones, handheld sensors, and resident complaints to track illegal Bitcoin mining, which has cost state-owned energy company Tenaga Nasional Berhad (TNB) about $1.1 billion in losses due to power theft. Authorities have uncovered around 14,000 illegal mining sites over the past five years, and since Bitcoin prices hit an all-time high in October, approximately 3,000 power theft cases related to Bitcoin mining have been recorded.

Drones with Thermal Imaging and Handheld Sensors Create a Tight Surveillance Network

In Malaysia’s hotspots for illegal cryptocurrency Bitcoin mining, the hunt starts from the sky. Drones hover over rows of shops and abandoned houses, searching for abnormal heat sources. Bitcoin mining equipment generates a significant amount of heat when operating, which is clearly visible through infrared thermal imaging cameras. Even if miners hide their equipment inside enclosed buildings, abnormal temperatures on roofs and walls can still reveal their locations.

On the ground, police use handheld sensors to detect abnormal electricity usage. These devices can measure the electromagnetic field strength of power lines, and when a building’s electricity consumption far exceeds normal levels, the equipment sounds an alarm. This technology is especially suitable for residential areas, as normal household electricity usage is relatively stable, while a small Bitcoin mining operation could consume dozens or even hundreds of times more power than an ordinary house.

Sometimes, the tracking methods are more primitive. Residents might report hearing strange bird calls, and when police arrive, they discover that someone is deliberately playing nature sounds to mask the roar of machines behind tightly closed doors. This cover-up technique shows that illegal miners are aware that noise is one of the main reasons they get exposed. The cooling fans of Bitcoin mining equipment produce continuous high-frequency noise, which is particularly noticeable in quiet residential neighborhoods.

Three Major Tools Malaysia Uses to Track Illegal Bitcoin Mining

Drone Thermal Imaging: Detects abnormal heat sources from the air to pinpoint suspected mining sites.

Handheld Sensors: Measures electromagnetic field strength on the ground to identify buildings with abnormal electricity usage.

Resident Complaint System: Encourages the public to report suspicious noises and unusual activity, providing leads.

These tools together form a surveillance network for tracking illegal Bitcoin miners. This multi-layered detection system demonstrates the Malaysian government’s determination to crack down on illegal mining. Compared to relying solely on electricity usage data from utility companies, drones and handheld devices provide more immediate and precise location capabilities.

14,000 Mining Sites Busted in Five Years, Losses Continue to Grow

(Source: Bloomberg)

Over the past five years, authorities have uncovered about 14,000 illegal mining sites. According to the Ministry of Energy, during this period, power theft has caused state-owned energy company Tenaga Nasional Berhad (TNB) around $1.1 billion in losses. Moreover, this situation is worsening: as of early October, when Bitcoin prices hit a record high, authorities had recorded around 3,000 new cases of power theft related to Bitcoin mining.

The $1.1 billion loss is staggering. For comparison, this figure is about 10% of Malaysia’s annual education budget, or enough to build several large hospitals. Such losses not only affect the financial health of the energy company but, more importantly, are passed on to all electricity users. When the power company loses revenue due to electricity theft, it often compensates by raising electricity rates, with the ultimate cost borne by law-abiding users.

Having 14,000 illegal mining sites busted over five years means that an average of about 7.7 mining operations are shut down each day. However, the 3,000 new cases as of October indicate that illegal Bitcoin mining is accelerating, far outpacing the enforcement efforts. This surge is closely related to skyrocketing Bitcoin prices: when Bitcoin hits record highs, mining profits soar, attracting more people to take the risk.

The impact of illegal mining on the power grid is not just economic but also technical. Large-scale electricity theft can cause imbalances in regional power grids, potentially leading to transformer overloads or even area-wide blackouts. In some extreme cases, illegal miners tap directly into high-voltage power lines, a dangerous practice that not only threatens the miners’ own safety but can also cause fires and public safety incidents.

Malaysia’s relatively low electricity prices are the main reason illegal mining is so attractive. As an exporter of oil and natural gas, electricity prices in Malaysia are subsidized by the government, making power costs for residents and businesses much lower than international levels. While these low prices are intended to benefit citizens and support industry, they have also inadvertently attracted a large amount of illegal Bitcoin mining activity. When miners don’t have to pay for electricity, almost all mining income turns into pure profit, fueling continued investment by criminal groups.

Interagency Special Committee Steps Up Crackdown

On November 19, the Malaysian government established an interagency special committee, including the Ministry of Finance, Bank Negara Malaysia, and Tenaga Nasional Berhad (TNB). This task force plans to coordinate the crackdown on illegal operators, signaling that the government now regards illegal Bitcoin mining as a national governance issue, not just a matter of power theft.

Deputy Minister for Energy Transition and Water Transformation and committee chair Akmal Nasrullah Mohd Nasir stated: “The risk of allowing such activities is no longer just about theft. In fact, they can even sabotage our facilities. This poses a challenge to our system.” Such remarks indicate the government recognizes the systemic threat illegal mining poses to national infrastructure.

Akmal pointed directly to organized crime involvement: “It’s clear these are criminal syndicates at work because they are very agile, often moving from one place to another. They do have a standard operating procedure.” Such organized features include professional power modification techniques, logistics capabilities for rapid equipment relocation, and counter-surveillance tactics to evade law enforcement.

The involvement of criminal syndicates greatly increases the difficulty of enforcement. Unlike individual, small-scale miners, organized crime groups have more resources and operate more professionally. They pre-survey multiple backup locations and, once one site is raided, immediately move to the next to continue operations. This guerrilla strategy keeps law enforcement agencies constantly on the run.

The formation of the interagency special committee aims to integrate resources and improve coordination efficiency. The Ministry of Finance tracks financial flows and conducts tax audits, Bank Negara monitors suspicious cryptocurrency transactions, and TNB provides data on abnormal electricity usage. With information sharing among the three, illegal mining sites can be identified and acted upon more quickly.

The Line Between Legal Mining and Illegal Power Theft

In Malaysia, as long as operators legally obtain power and pay taxes, Bitcoin mining is legal. This means the government is not opposed to Bitcoin mining itself, but rather to electricity theft and tax evasion. This policy stance is relatively moderate, in contrast to China’s tough, outright ban on Bitcoin mining.

However, the cost of electricity for legal mining in Malaysia makes it difficult to turn a profit. Even with Malaysia’s relatively low electricity prices, after paying for power legally, mining profit margins remain slim—especially given Bitcoin’s price volatility and intensified global hash rate competition. This economic reality drives many miners to take risks, using stolen electricity to eliminate their biggest cost.

The challenge for the government is how to crack down on illegal activity while creating a sustainable business environment for legal mining. Some analysts suggest that Malaysia could learn from Kazakhstan and Iceland by offering special industrial electricity rates for legal Bitcoin mining, thus attracting investment and tax revenue while bringing the industry under regulatory oversight.

From a broader perspective, Malaysia’s case reveals common patterns in illegal Bitcoin mining worldwide. In regions with cheap electricity or lax grid management, illegal mining is often rampant. This problem is not unique to Malaysia: Venezuela, Iran, and parts of Eastern Europe and Central Asia all face similar challenges.