Malaysian police crush $ 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 the police headquarters, and used a steamroller to crush them, as part of a joint operation between law enforcement in the city of Miri and the Sarawak power company. Energy.

Deputy Police Commissioner Hakemal Hawari told CNBC that the crackdown came after miners allegedly stole $ 2 million in electricity drawn from Sarawak Energy’s power lines.

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

Acting on a runway, authorities on the island of Borneo seized the rigs in six separate raids between February and April. In total, the police destroyed about $ 1.26 million worth of 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 route, supposedly auctioning seized gear.

Hawari said that the theft of electricity by bitcoin miners set three houses on fire in the city. Miri’s police chief told CNBC that there are currently no other active mining operations in progress.

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

While mining cryptocurrency is not illegal in Malaysia, there are strict laws on energy use. Section 37 of the Malaysian Electricity Supply Act threatens those who tamper with power lines with fines of up to 100,000 Malaysian Ringgit ($ 23,700) and 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 among the top ten mining destinations on the planet.

Eight have been arrested in connection with the mining operation in Miri, and six people have been charged under Section 379 of the Penal Code for stealing power supplies, according to Hawari. The defendants 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 fight to track down crypto mining criminals.

In March, a bitcoin miner from the city of Melaka on the Malaysian peninsula stole $ 2.2 million worth of electricity from the 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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