Illegal Cryptocurrency Mining Operation in Mexico
In a significant operation, authorities in Mexico targeted an illegal cryptocurrency mining site in the Sierra Norte region, apprehending 300 mining rigs that were unlawfully tapping into electricity from a federal hydroelectric facility. According to the state security ministry, the joint operation involved federal prosecutors, the Navy, and local law enforcement in Puebla and occurred on Sunday.
Seized Equipment and Mining Focus
The seized equipment included not only the mining rigs but also transformers, medium-voltage terminals, and operational satellite internet antennas located in Tlaola, a municipality with a population of about 20,000. Reports from El País and Mexico News Daily indicated that the machines resemble GPUs, indicating a mining focus on cryptocurrencies that are traditionally mined using graphics cards, rather than Bitcoin.
Legal Implications and Investigations
While the act of cryptocurrency mining itself is permitted under Mexican law, authorities are preparing to file charges related to theft of electricity. “Mining operations require a substantial amount of power and create considerable noise, compelling operators to seek out secluded areas, which ultimately raised suspicion,” explained state security minister Francisco Sánchez during a press briefing. He noted that the investigations were prompted by reports of illegal mining activities near the Nuevo Necaxa dam, where significant power connections were identified.
Sánchez emphasized that this operation appears to be part of a broader network that is allegedly exploiting the hydroelectric resources of the Sierra Norte, and similar activity has also been identified in neighboring states, prompting extended searches in adjacent municipalities. Furthermore, the possibility of money laundering is under investigation as forensic accountants delve into the financial backers of the seized equipment. Local media reports indicate that authorities are assessing whether the output from this mining operation was utilized to launder illicit proceeds. Mexico’s Federal Electricity Commission is also involved in this ongoing inquiry.
Impact of Electricity Theft
The utility company reported staggering non-technical losses—including theft and illegal connections—totaling 6,346 gigawatt hours from January to July 2024, amounting to an estimated loss of around 13.8 billion pesos (approximately $817 million). This crackdown is not an isolated incident; three other mining operations were dismantled in Puebla and the neighboring Tlaxcala last year. Additionally, another illegal farm was uncovered near the same dam, purportedly associated with properties linked to the electrical workers’ union.
Global Context of Electricity Theft
Electricity theft by cryptocurrency miners is a global issue, with other countries facing similar challenges. For instance, in Malaysia, authorities confiscated over 75,000 mining rigs linked to power theft last year, with losses estimated at $1.1 billion, while Brazilian police conducted a raid on an illegal mining operation in Rio de Janeiro.
