Malaysian police masquerade as $ 1.25 million in bitcoin mining rigs


Call it a crypto crackdown – literally.

Malaysian authorities seized 1,069 bitcoin mining rigs, placed them in a parking lot at police headquarters, and used a steamroller to crush them, as part of a joint operation between law enforcement agencies in Malaysia. the town of Miri and the utility company Sarawak Energy.

Deputy Police Commissioner Hakemal Hawari told CNBC the crackdown came after miners allegedly stole $ 2 million worth of electricity siphoned from Sarawak Energy power lines.

A video of the event posted last week by the local Sarawak newspaper, Dayak Daily, has since gone viral on social media.

Acting on a tip, authorities on the island of Borneo confiscated the platforms in six separate raids between February and April. In total, police destroyed around $ 1.26 million in mining equipment.

The police chose to crush the mining equipment rather than sell it, according to a court order. Other countries, like China, have taken a different path, would have auctioned platforms seized.

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Hawari said the theft of electricity by bitcoin miners led to the burning of three houses in the city. Miri’s police chief told CNBC that there are currently no other active mining operations underway.

Crypto mining is the energy intensive process that creates new bitcoins. When people “exploit” it actually means that they are trying to solve a complex mathematical problem using a highly specialized computer. Solving this problem is both what unlocks new tokens and verifies new transactions. However, running these machines at full capacity consumes a lot of energy, which can put local power grids at risk.

While mining for cryptocurrency is not illegal in Malaysia, there are strict laws regarding the use of energy. Section 37 of Malaysia’s Electricity Supply Act threatens those who tamper with power lines with fines of up to 100,000 Malaysian ringgits ($ 23,700) and up to five years in prison.

The Cambridge Center for Alternative Finance estimates that Malaysia accounts for 3.44% of all bitcoin miners in the world, placing it in the top ten mining destinations on the planet.

Eight were arrested in connection with mining in Miri, and six people were charged under article 379 of the Penal Code for theft of energy supplies, according to Hawari. Those charged will be jailed for eight months and face a fine of up to $ 1,900 per person.

This is just the latest example of Malaysia’s struggle to track down crypto mining criminals.

In March, a bitcoin miner in the city of Melaka, Peninsular Malaysia, stole $ 2.2 million worth of electricity from energy company Tenaga Nasional Berhad.

Malaysian Borneo is much less densely populated than Peninsular Malaysia.

– CNBC’s Nessa Anwar contributed to this report.

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