This is how a sting operation shut down a bitcoin mining syndicate in Malaysia

On 28 February, anti-corruption officers busted a bitcoin mining syndicate through a raid—shutting down 20 of the 998 premises operated by the syndicate. It’s all thanks to a sting operation that began three years ago when MACC officers disguised as TNB meter readers were paid RM2.4 million in bribes.

What was the syndicate?

“Their modus operandi is simple. They would try to bribe TNB technicians during their routine checks to turn a blind eye to power theft for bitcoin mining purposes. They would either offer a monthly cash payment or through cryptocurrency,” said MACC chief Tan Sri Azam Baki.

It’s reported that the syndicate was raking in a whopping RM50 million a month from their 1,000 premises nationwide—so they could afford to keep TNB technicians quiet. Investigations showed that the network offered between RM3,000 and RM300,000 as bribes. In total, RM2.4 million had been given out across the 998 bitcoin mines.

Just as a short recap on how illegal bitcoin mining works, it takes a heck of a lot of energy to be able to mine cryptocurrency like bitcoin. All that energy would require an insane amount of money to power—if you use RM100 of electricity, and get RM80 worth of bitcoin, your operation is not profitable. But if you use RM0 electricity and get RM80 of bitcoin, it will be profitable… but extremely illegal.

“The amount of electricity stolen at each premises could amount to RM40,000 per month…” said a source close to the investigation, saying that the syndicates earned around RM50,000 from every premises, “If they had paid their electricity bills, they could still make a profit because most of them own dozens of premises each. But greed got the better of them.”

How did they get caught?

The raid, a joint operation with TNB called “Ops Power”, involved crippling the syndicate simultaneously in different locations—including in Malacca, Negri Sembilan, Kedah, Penang, Kuala Lumpur, and Selangor. The officers confiscated RM281,180 worth of cash and arrested 18 people, including heads of syndicates.

“It took us an hour to break open two doors at each premises… And then, there were three more vault-like doors to cut through before we could enter one of the premises… We had to seek the help of the Fire and Rescue Services,”

More than 200 bitcoin mining machines were seized in the raids, which also involved dozens of Tenaga Nasional officers. Following the raids, assets worth a total of RM4,476,814.93 from 126 bank accounts belonging to 97 people and 29 companies have been frozen. Among the other things confiscated by the MACC were 1,157 graphics processing units valued at RM2.3 million in total, RM82,000 in e-wallets, and USD 25,893.46 in cryptocurrency used by the syndicate.

It was previously reported that illegal bitcoin mining have increased drastically in 2021 compared to the previous year. To be specific, Malaysia had 570 investigation papers opened, 528 people arrested and RM54 million worth of mining equipment seized in 2021 alone.

[ SOURCE, IMAGE SOURCE ]

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