Bitcoin mining is a complex activity that requires adding data to the blockchain and has been the subject of complaints. While it’s definitely a lucrative deal for some, it impacts the local power grid.
By some estimates, mining just one coin requires up to 155,000 kilowatt-hours (kWh) of electricity, and each transaction requires approximately 851 kWh, which is more than the average U.S. household consumes in one month. This corresponds to the amount of electricity supplied for 20 minutes.
The Bitcoin mining threat is global, with many national and local economies feeling the pinch. For example, Tenaga Nasional Berhad, Malaysia’s state-owned power company, reported losses of more than 440 million ringgit (approximately $101 million) due to mining-related power theft. This number exceeds the reported seizure of $500,000 worth of Bitcoin mining-related electronics.
According to local reports, thefts have affected TNB for years
According to a report in The Star, Tenaga Nacional Berhad has been bleeding from Bitcoin mining-related thefts since 2020. According to Kom Datuk Seri Mohd Shuhairy Mohd Zain, the company had increased losses compared to the previous year.
The director added that in 2020 alone, the company made a loss of RM5.9 million, which increased to RM140.4 million the following year. And in 2022, the loss reached RM124.9 million. In 2023, it increased to RM67.1. This year’s losses have reached RM103 million, and the number continues to rise.
As of today, the market capitalization of cryptocurrencies stands at $2.4 trillion. Chart: TradingView.com
Bitcoin mining continues to impact local supply
TNB and local authorities claim the losses date back to 2018 and are related to illegal mining activities. TNB said in a separate document that its total losses from 2018 to 2023 exceeded $755 million.
Cryptocurrency mining only accounts for a small portion of Malaysia’s total consumption, but it has a significant financial impact. Apart from TNB’s losses, more than $500,000 worth of electrical equipment related to illegal mining operations was seized.
The seizure of these electronic products by the government is part of Malaysia’s tax evasion campaign involving various parties involved in cryptocurrencies. Malaysia’s Criminal Investigation Department will investigate factors contributing to the rising trend of thefts and losses.
How will Bitcoin mining affect power companies?
Bitcoin mining is a complex activity that adds new data to the blockchain, but it requires a lot of electricity. In exchange for Bitcoin, individuals or businesses must solve complex mathematical problems to “mine” or obtain Bitcoin.
But experts say the process requires large amounts of computing power and energy. In many countries like Malaysia, people tend to avoid payments and commit crimes because of the need for sufficient electricity supply.
Featured image created using Dall.E, chart on TradingView
