Sting cripples bitcoin syndicates

PETALING JAYA: It was a sting operation that began three years ago during which time MACC officers disguised as TNB meter readers were paid RM2.4mil in bribes.

Some were even offered bitcoin – a first for graft busters – to turn a blind eye to the power theft by mining syndicates.

The masterminds could afford this. They were raking in a whopping RM50mil a month from their 1,000-odd premises nationwide.

Yesterday, the anti-corruption officers crippled much of their activities by conducting simultaneous raids in Malacca, Negri Sembilan, Kedah, Penang, Kuala Lumpur and Selangor. But it wasn’t easy.

“It took us an hour to break open two doors at each premises,” a source close to the investigation revealed.

“And then, there were three more vault-like doors to cut through before we could enter one of the premises,” the source said.

“We had to seek the help of the Fire and Rescue Services.”

Dozens of suspects were arrested, including the heads of the syndicates. More than 200 bitcoin mining machines were also seized in yesterday’s raids that involved dozens of Tenaga Nasional officers.

“Some 350 MACC officers were involved in the probe,” said the source.

While it is not illegal to mine bitcoin, power theft is.

This is done because running such an operation requires dozens of computer servers that would be in operation around the clock.

“This would require huge amounts of electricity,” said the source.

“The amount of electricity stolen at each premises could amount to RM40,000 per month,” added the source, 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,” the source explained.

“But, greed got the better of them.”

Bitcoin mining uses sophisticated computer software to try to solve complex mathematical problems to unlock a “key” that will enable a new bitcoin to be produced.

The bitcoin market is highly volatile. Its value fluctuated from RM160,000 to RM277,000 in a month.

A MACC spokesman confirmed yesterday’s raids.

Yesterday, The Star reported that bitcoin mining operators were reaping in millions at the expense of the public.

Local communities, including hospitals, that shared the same power source as the mining premises, were being deprived of supply.

Some buildings located near the bitcoin mining premises experienced power outages often, with some burning to the ground.

It is understood that the graft busters began the sting operation following a sharp increase in losses incurred by the country due to electricity theft.

“Each premises owns around 80 to 120 bitcoin machines.

“They bring in these machines from China via Port Klang. They declare it as computer equipment,” the source said.

Investigations are being conducted under Sections 16 (b) and 17 (b) of the MACC Act 2009 and if convicted, the guilty face a maximum imprisonment of 20 years and can be fined not less than five times the value of the bribe or RM10,000, whichever is higher.

On Jan 24, Energy and Natural Resources Minister Datuk Seri Takiyuddin Hassan said the country lost more than RM2.3bil in bitcoin mining activities – an increase of 400% over the past four years.