According to an industry report released by the Malaysian Blockchain Association, rampant electricity theft by illegal miners, inconsistent policies, and a lack of legal clarity may hinder Malaysia's ability to fully tap into the potential of cryptocurrency mining.

The report predicts that Malaysia's crypto mining market will grow by 110.2% by 2025—from $2.44 billion to $5.13 billion—thanks to its strategic geographical location, an evolving tech ecosystem, and expertise in Sharia-compliant finance. However, the report notes that the country must address several internal factors to sustain continuous growth.

From 2020 to September 2024, Malaysia's multinational power company Tenaga Nasional Berhad (TNB) lost 441.6 million Malaysian Ringgit ($104.2 million) due to electricity theft, which the company primarily attributes to illegal Bitcoin (BTC) mining. Losses from 2018 to 2021 reached 2.3 billion Ringgit.

The report emphasizes Malaysia's "potential demand" and the necessity of establishing a regulated, incentivized environment to capitalize on the capital losses caused by unlicensed crypto mining: "Regularizing these (illegal mining) activities will convert the stolen energy into legitimate revenue for TNB and create taxable income for the government."

(Note: These figures are for reference only and are highly dependent on policy implementation, operator confidence, and market conditions.)

The report adds that if Malaysia can incorporate some illegal operators into a metered connection system, it could establish a stable revenue stream of millions of dollars from crypto mining.

Although the government previously assumed that the number of legal crypto miners was scarce, the report found that several medium and large legal operators already exist in Malaysia. However, they avoid public exposure due to concerns about cyberattacks, physical theft, and sudden regulatory changes.

Companies like Hatten Land have begun exploring on-ground mining infrastructure, including collaborations with companies like Hydra X and Frontier Digital Asset Management in Malacca. The report states: "Companies like Hatten Land have indicated partnerships involving thousands of mining devices."

With its strong internet connectivity and abundant hydroelectric resources, Malaysia is well-positioned to leverage a nearly $3 billion crypto mining market. However, the Securities Commission, which is currently responsible for regulating cryptocurrency exchanges, has yet to establish a specific framework for mining.

According to the report, Malaysia ranks 7th to 8th globally in hash rate, contributing approximately 2.5% to 3% of Bitcoin mining power.

Policy recommendations include creating dedicated mining licenses, introducing green electricity pricing schemes, eliminating legal loopholes related to electricity theft, and developing Sharia-compliant mining models.

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Original text: “Malaysia's Illegal Cryptocurrency Mining Surge, Policy Ambiguity as Main Cause”

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