Call it a crypto crackdown — literally.
Malaysian authorities seized 1,069 bitcoin mining rigs, laid them out in a parking lot at police headquarters, and used a steamroller to crush them, as part of a joint operation between law enforcement in the city of Miri and electric utility Sarawak Energy.
Assistant Commissioner of Police Hakemal Hawari told CNBC the crackdown came after miners allegedly stole $2 million worth of electricity siphoned from Sarawak Energy power lines.
A video of the event posted last week by local Sarawak news outlet Dayak Daily has since gone viral on social media.
Acting on a tip, authorities on the island of Borneo confiscated the rigs in six separate raids between February and April.In total, police destroyed about $1.26 million of mining equipment .
Police opted to crush the mining gear rather than sell it, in accordance with a court order.Other countries, like China, have taken a different route, reportedly auctioning off seized rigs.
Read more about cryptocurrencies from CNBC Pro Gundlach says the bitcoin chart looks pretty scary here, and he wouldn’t own it
Investing in Ethereum? What you need to know about it and why it’s not just another bitcoin
Bitcoin’s ‘mining difficulty’ is about to fall.Here’s what that means for the cryptocurrency
Hawari said that electricity theft by bitcoin miners led to three houses burning down in the city.The Miri police chief told CNBC that there are no other active mining operations underway currently.
Crypto mining is the energy-intensive process which creates new bitcoin.When people are “mining,” that actually means they’re trying to solve a complex math problem using a highly specialized computer.Solving that problem is both what unlocks new tokens and verifies new transactions.
However, running those machines at full capacity draws a great deal of power, which can jeopardize local power grids.
While mining for cryptocurrencies is not illegal in Malaysia, there are stringent laws around power use.Section 37 of Malaysia’s 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.
VIDEO 8:42 08:42 Why does bitcoin use so much energy? CNBC Explains 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.
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.
This is just the latest example of Malaysia’s struggle to track down crypto mining criminals.
In March, a bitcoin miner in the city of Melaka on Peninsular Malaysia stole $2.2 million worth of electricity from energy company Tenaga Nasional Berhad.
Malaysian Borneo is much less densel populated than Peninsular Malaysia.
— CNBC’s Nessa Anwar contributed to this report.
VIDEO 2:00 02:00 Why the U.S.is ‘the darling’ of the bitcoin mining world The Exchange.
