Bitcoin mining is a lucrative yet controversial activity that has been causing issues for local electricity grids around the world. The process of adding data to the blockchain requires a significant amount of electricity, with estimates suggesting that up to 155,000 kilowatt hours (kWh) are needed to mine just one coin. Each transaction also consumes around 851 kWh, equivalent to the monthly electricity supply for an average household in the US.
The impact of Bitcoin mining on local economies is significant, with national and local electricity providers feeling the strain. For example, Malaysia’s national electricity provider, Tenaga Nasional Berhad, has reported losses of over 440 million Ringgit (approximately $101 million) due to electricity theft related to Bitcoin mining. This figure does not include the confiscation of electrical items valued at $500,000 that were associated with Bitcoin mining activities.
Reports from local sources indicate that Tenaga Nasional Berhad has been experiencing losses due to Bitcoin mining-related thefts since 2020. The losses have been increasing year-on-year, with the company losing millions of Ringgit annually. The losses have now accumulated to over 755 million Ringgit between 2018 and 2023, according to TNB’s reports.
Despite crypto mining accounting for a small portion of Malaysia’s total electricity consumption, the financial impact on TNB is substantial. The government has seized over $500,000 worth of electrical equipment linked to illicit mining operations as part of a broader campaign against tax evasion involving cryptocurrencies.
The complex nature of Bitcoin mining, which involves solving mathematical problems to acquire Bitcoin, requires a significant amount of computational power and energy. In countries like Malaysia, where electricity supply is crucial for mining operations, the temptation to evade payments and engage in illegal activities is high.
The government and authorities are taking steps to address the issue of electricity theft and its impact on the local supply. Malaysia’s Criminal Investigation Unit is planning to investigate the thefts and the factors contributing to the increasing trend of losses related to Bitcoin mining.
Overall, Bitcoin mining continues to be a contentious issue that not only affects the profitability of miners but also puts strain on local electricity providers and economies. As the cryptocurrency market continues to grow, it is essential for regulators and stakeholders to find sustainable solutions to mitigate the negative impacts of Bitcoin mining on local communities.
