Bitcoin mining has emerged as a highly intricate activity that involves the addition of data to the blockchain. While considered a profitable venture for some, it has drawn criticism for its substantial impact on local electricity infrastructures. The process demands significant energy, with some estimates suggesting that mining a single Bitcoin requires approximately 155,000 kilowatt hours (kWh) of electricity. Furthermore, each transaction necessitates around 851 kWh, equivalent to a month’s electricity consumption for an average household in the United States.
Global Concerns: The Ripple Effect of Bitcoin Mining
The repercussions of Bitcoin mining are felt worldwide, affecting national and local economies significantly. For instance, Malaysia’s national electricity provider, Tenaga Nasional Berhad (TNB), has reported staggering losses exceeding 440 million Ringgit (around $101 million) attributed to electricity theft linked to mining activities. In addition to these financial setbacks, electrical equipment confiscated due to illicit Bitcoin mining operations has been valued at $500,000.
The Ongoing Struggle: TNB’s Battle Against Electricity Theft
According to The Star, TNB has been grappling with Bitcoin mining-related thefts since 2020. Comm Datuk Seri Mohd Shuhaily Mohd Zain has highlighted the increasing losses experienced by the company year after year. In 2020, TNB reported losses of RM5.9 million, which surged to RM140.4 million in 2021. The trend continued with RM124.9 million in losses recorded in 2022, and a further RM67.1 million in 2023. As of this year, the tally has reached RM103 million and continues to rise.
A Broader Perspective: The Cryptocurrency Market
As of today, the global cryptocurrency market cap stands at an impressive $2.4 trillion. This burgeoning market has spurred increased interest in Bitcoin mining, further exacerbating its impact on local energy supplies.
Local Energy Supply Under Siege: The Case of Malaysia
Tenaga Nasional Berhad and local authorities have traced the origins of their losses back to 2018, linking them to unauthorized mining operations. Between 2018 and 2023, TNB’s losses related to crypto mining totaled more than $755 million. While crypto mining contributes a minor fraction to Malaysia’s overall energy consumption, its financial toll is undeniable. Beyond TNB’s losses, over $500,000 worth of electrical equipment associated with illegal mining operations has been seized. These confiscations are part of Malaysia’s broader crackdown on tax evasion involving various cryptocurrency-related entities. The country’s Criminal Investigation Unit is committed to probing the thefts and understanding the underlying factors contributing to the increasing trend of losses.
The Energy-Intensive Nature of Bitcoin Mining
Bitcoin mining is an energy-intensive endeavor that requires solving complex mathematical problems to add new data to the blockchain. In return for successful mining, individuals or organizations receive Bitcoin. However, this process demands immense computational power and energy resources. In countries like Malaysia, the significant energy requirements often drive individuals to bypass payments and engage in unlawful activities.
