Illegal Crypto Mining Increases In Malaysia Amid Unclear Policies

JAKARTA - Illegal cryptocurrency mining that is rampant and lack of regulation is an obstacle for Malaysia to take advantage of the potential income from crypto mining activities. This was reported by the Olig Access Blockchain Association of Malaysia.

Although Malaysia has a strategic position, a developing technology ecosystem, as well as expertise in Islamic finance, the report highlights that this country must address a number of internal problems in order to maximize revenue from crypto mining.

Malaysian multinational electricity company, National Berhad Personnel (TNB), suffered a loss of 441.6 million Malaysian ringgit (around Rp1.6 trillion) due to electricity theft from 2020 to September 2024. This loss was mostly caused by illegal Bitcoin mining activities. From 2018 to 2021, losses reached 2.3 billion ringgit.

The report confirms the existence of latent demands in Malaysia and the importance of creating a regulated environment and being given incentives so that lost income due to illegal mining can be channeled to official income.

"By formalizing this (illegal mining) activity, the energy previously stolen could become legal income for TNB and generate tax revenue for the government," the report said.

While the government previously thought that crypto miners were still few, reports showed that there were already several middle to large-scale legal operators in Malaysia. However, they chose to operate without widespread publications for fear of cyberattacks, physical theft, and sudden regulatory changes.

Companies like Hatten Land have started building transparent mining infrastructure, including partnerships in Melaka with Hydra X and Frontier Digital Asset Management. Companies like Hatten Land have announced partnerships involving thousands of rigs, the report said.

With a strong internet connection and abundant hydro energy supply, Malaysia has great potential to take part in a global crypto mining market worth nearly $3 billion. However, the Malaysian Securities Commission, which currently regulates crypto exchanges, does not yet have a special framework for mining.

Malaysia ranks 7th to 8th globally by hashrate, accounting for about 2.5% to 3% of the world's Bitcoin mining.

Reports recommend that governments create special licenses for mining, introduce green tariffs, close legal loopholes related to electric theft, and develop mining models that comply with sharia principles.