Bitcoin Miners Shift To Southeast Asia

Bitcoin miners are moving to Southeast Asia; in spite of operational and regulatory difficulties, Malaysia contributes 2.5% of the world’s hashrate.

TakeAway Points:

  • Southeast Asia is becoming a popular destination for bitcoin miners, with Malaysia and Indonesia seeing a lot of activity because of their accessible electricity and well-established infrastructure.
  • Following China’s 2021 crackdown on Bitcoin mining, Bityou’s Peter Lim shifted operations from China to Sarawak, Malaysia.
  • Bitcoin mining and rig manufacturing are predicted to increase significantly in Southeast Asia, despite obstacles related to regulations and electricity theft.

The Shift in Bitcoin Mining to Southeast Asia

In Tanjung Manis, Sarawak, a once-abandoned 17-acre cement slab is now buzzing with over 1,000 Bitcoin mining devices. The largest of four sites in the region, this Bityou-run facility signifies a dramatic change in the Bitcoin mining industry worldwide. The owner, Peter Lim, spotted an opportunity in the deserted industrial park after being forced to shut down a larger operation in China as a result of the 2021 ban on mining Bitcoin.  

“Most of the companies have already left this industrial park. We decided, why don’t we make use of these abandoned resources?” Lim said.

This move is part of a broader trend of Bitcoin miners relocating to Southeast Asia following China’s crackdown on crypto-related activities. In 2019, China accounted for about three-quarters of global Bitcoin mining activity, according to Cambridge University data. However, the Chinese authorities’ declaration that any crypto-related transactions would be considered illicit financial activity decimated the industry there.

Growing Hashrate in Southeast Asia

As China exited the Bitcoin mining scene, the US quickly became the global leader in terms of hashrate by January 2022. However, Southeast Asian nations are now climbing the ranks. Malaysia, for instance, contributed 2.5% of the global hashrate, placing it among the top 10 nations.

Preliminary research suggests that Indonesia’s mining activity “markedly rose” in 2022 to between “lower and mid-single digit percentages,” according to Alexander Neumüller, a research lead at Cambridge.

The region’s allure for miners lies in its competitively priced power, skilled labor, and existing infrastructure. Miners are setting up operations in abandoned shopping malls, former steel factories, and near hydro-electric power projects. 

Unlike the US, where miners can exploit “gluts of power” for preferential prices, Southeast Asian miners must find unique setups to access the electricity they need. Fred Thiel, CEO and chairman of Marathon Digital Holdings, noted that the region doesn’t have the option of exploiting these power gluts.

Operational and Legal Difficulties

While some miners in Southeast Asia operate within the law, others resort to illegal activities, such as siphoning electricity, leading to government raids. In Malaysia, Indonesia, and Laos, police raids on Bitcoin miners illegally siphoning energy are common. 

Malaysia’s energy and natural resources minister, Takiyuddin Hassan, estimated that electricity theft by Bitcoin miners had cost the country 2.3 billion ringgit ($550 million) as of early 2022.

Setting up mining operations in the region is not always straightforward. In Laos, for example, an extreme drought this year derailed mining activities by causing the state-run power company to withdraw electrical supply from miners. Despite these challenges, significant growth is expected in both mining and manufacturing. 

“Southeast Asia is poised to take off in the next few years,” said Taras Kulyk, founder and CEO of SunnySide Digital.

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