Bitcoin Mining in Malaysia

How Malaysia may take China’s mining crown of Asia.

We’ve all seen it by now. Back earlier this year, a viral video showing a steamroller in Malaysia crushing and obliterating hundreds of ASICs was the talk on social media. Crypto Twitter became captivated by the tenacity of this act with many influencers and KOLs feeling the pain of someone daring to destroy the tools used to mine bitcoins. An act of treason some may say. We know for sure bitcoin miners across the globe felt the pain of seeing that.

The irony of it all is that crypto mining is not illegal in Malaysia. But the act of stealing electricity is. Those miners were purposely confiscated from miners that stole about $2 million worth of electricity from the official state grid company, Sarawak Energy. The confiscation was a joint raid amongst miners in the local city of Miri.

A total of over $1 million worth of ASICs were destroyed as the government didn’t want to sell them off on the second-hand market. Rather their moves made a loud statement that stolen electricity won’t be tolerated.

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

The Cambridge Center for Alternative Finance estimates that Malaysia accounts for 3.44% of all the world’s bitcoin miners, placing it in the top ten mining destinations on the planet. (1)

The Cambridge Center for Alternative Finance estimates that Malaysia accounts for 3.44% of all the world’s bitcoin miners, placing it in the top ten mining destinations on the planet. (1)

Malaysia has unique geography where it is separated into two different unconnected parts, with both having their borders surrounded by water, specifically the South China Sea. Both parts share a largely similar landscape in that both Peninsular and East Malaysia feature coastal plains rising to hills and mountains. Peninsular Malaysia, which is the part of Malaysia with the highest population and includes cities such as Kuala Lumpur, contains a series of mountain ranges part of the Titiwangsa Mountains.

The mountain ranges are the origins of some of the country’s large river systems. East Malaysia, on the island of Borneo, has a coastline of 2,607 km and is divided between coastal regions, hills and valleys, and a mountainous interior.

“Malaysia has relatively abundant hydropower resources, albeit unevenly distributed among the different parts of the country, with heavier concentrations in Sabah and Sarawak. The first major hydropower dam, the Chenderoh Dam (27MW), was constructed in 1930. In the decades that followed, systematic development of the country’s natural resources has contributed over 27,300GWh of energy annually from an overall installed capacity of 6240MW. This represents about 17% of the total generation capacity (34,200MW) in the country, including gas, solar, coal and other power sources.

Malaysia has a total landmass of about 330,000km2 with a mean elevation of about 300m. The average rainfall is slightly more than 2600mm per year. In the mid-1970s an inventory survey of hydropower resources of the country was conducted and has since been used as indicative information of available hydropower resources within the country. Overall, the total gross hydropower potential documented is about 414,000GWh per year of which about 123,000GWh per year is the technical potential for development. About 87,000 GWh (70%) of this energy potential is located in Sarawak, 20,000 GWh in Sabah and 16,000 GWh in Peninsular Malaysia.

The development of major hydropower projects in Malaysia is generally undertaken by the utility companies such as Tenaga Nasional Berhad (TNB) in Peninsular Malaysia, Sarawak Energy Berhad (SEB) in Sarawak while in Sabah by the Sabah Electricity Sdn Bhd (SESB). There have been attempts by private players to participate in the development of major hydropower in Malaysia but with very little success to date. The development of smaller hydropower projects below 30MW is open to private parties and incentivized by the Feed-in Tariff (FiT) mechanism managed by the Government.” (3)

In October, Malaysian mall operator and developer, Hatten Land, announced their intent in working with Singapore Myanmar Investco in exploring business opportunities in cryptocurrency mining.

It should be a strange headline to see a mall developer come out and announce its plans to get into crypto. The past year has seen a swarm of non-related companies announce their interest in crypto and bitcoin. A couple of weeks after the SMI announcement, Hatten Land started working with Frontier Digital Asset Management in installing at least 1,000 crypto mining machines at properties owned or managed by Hatten Land in the Malaysian state of Malacca. The rigs will mine Bitcoin initially, with alternative coins to be considered in the future, it said.

“The Hatten Group has sufficient capacity to host the new green crypto mining operations in our malls without eliminating the retail aspect,” Executive Chairman and Managing Director Colin Tan said in an email Thursday. The “operations will improve the utilization and in turn enhance the profitability of our malls.”

Historically China has been the crowned leader for bitcoin mining in Asia, but ever since the harsh crackdown of bitcoin mining in China this year, Malaysia might be able to take that leadership crown within the Asian countries. Malaysia also has a vast crypto scene with some notable projects being from there such as CoinGecko.

And Malaysia is geographically situated in an advantageous location. With China in the north and Singapore on its southern border, mining financing is abundant with investors looking for yield in profitable locations such as Malaysia. Historically, Malaysia has always been a hotbed for investments due to its developing-developed country characteristics. It’s a mature country with strong regulations but also a vastly expanding country as well.

Compared to other countries and excluding China, Malaysia seems very well situated to be the mining leader in Asia.

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