Illegal Crypto Mining in Malaysia Surges

Widespread electricity theft, regulatory ambiguity, and inconsistent policies are undermining Malaysia’s ability to capitalise on the economic potential of cryptocurrency mining, according to a new report from the Access Blockchain Association of Malaysia.

Despite the country’s strategic geographic position, expanding tech infrastructure, and expertise in Shariah-compliant finance, the report emphasizes that internal barriers must be addressed to unlock future growth.

It forecasts a surge in legal mining activity, driven by increased investment in infrastructure, data center capacity, and institutional engagement.

However, persistent electricity theft by illegal mining operations continues to destabilise the national grid and deter investors.

Between 2020 and September 2024 alone, Tenaga Nasional Berhad (TNB), Malaysia’s national utility, lost over RM441 million (US$104 million) to unauthorised crypto miners—part of a broader RM2.3 billion in losses recorded between 2018 and 2021.

These illicit setups, often hidden in residential and commercial spaces, pose safety risks and strain the power system.

The report argues that Malaysia could unlock a stable, multimillion-dollar revenue stream by transitioning even a portion of illegal miners to regulated, metered operations—provided the country builds a clear, incentive-based regulatory framework to match the sector’s latent demand.

Regulatory Confusion Pushes Compliant Crypto Miners Into the Background

Although the Malaysian government has long assumed that legal crypto mining operations were limited, new findings reveal that several medium- to large-scale miners are already active in the country.

These firms, however, operate discreetly—avoiding public attention due to fears of cyber threats, physical security risks, and sudden regulatory changes.

Companies such as Hatten Land are beginning to bring mining infrastructure above ground, forming partnerships in Melaka with firms like Hydra X and Frontier Digital Asset Management.

The report stated:

“Companies like Hatten Land have already signaled partnerships involving thousands of rigs.”

With robust internet infrastructure and access to abundant hydropower, Malaysia is well-positioned to capitalise on the global crypto mining market, estimated to be worth nearly $3 billion.

Yet, despite regulating digital asset exchanges, the Securities Commission has yet to establish a framework tailored to mining.

The report places Malaysia among the top 10 contributors to Bitcoin mining globally, accounting for an estimated 2.5% to 3% of the total hashrate.

To strengthen its foothold, the report recommends introducing a dedicated mining license, incentivising green energy use through tailored tariffs, tightening enforcement around electricity theft, and developing Shariah-compliant mining models to align with local financial principles.