Brazil Clamps Down on Illegal Rio de Janeiro Crypto Mining Operation

In brief

A Governador Island man has been arrested on charges of siphoning off-grid electricity to mine cryptocurrencies.
Brazil’s ruling Workers Party is pushing for mining to be confined to licensed, regulated entities.
Illegal crypto mining is a growing problem around the world, with incidents in countries ranging from Malaysia to Kuwait over the past year.

As neighbouring countries like Paraguay and Venezuela deal with the impact of illegal crypto mining, a man has been arrested in the state of Rio de Janeiro in Brazil on charges of siphoning off-grid electricity to mine cryptocurrencies.

The incident occurred in the Freguesia area, on Governador Island, an island in the north of the state. According to communications from local police, officers found several high-performance machines used for digital mining and that the house had electricity but no meter, indicating illegal theft.

The property was rented exclusively for cryptocurrency mining operations according to police, and the mining activity was carried out 24/7. The alleged perpetrator has been arrested for electricity theft.

Though electricity theft is not legal, grassroots crypto mining itself is legal in Brazil. But the country’s ruling party, the Workers Party, is currently pushing for mining to be confined to regulated, approved entities who have received a Digital Miner Authorization License.

Other similar incidents have cropped up in the country’s capital of São Paulo in recent months, with local police announcing an official crackdown.

Illegal crypto mining around the world

Crypto mining, both legal and illegal, has taken off in South America in recent years. Venezuela announced an initiative in May 2023 to shut down illegal miners operating in the country, citing strain on its electricity grid, which is prone to shutdowns.

Meanwhile, Paraguay unveiled a proposed ban in April 2024 to try to stamp out the country’s illegal mining operations, as the country also looks to house some of the world’s largest legal crypto mines. The country’s state-owned utility firm claimed it has lost $60 million due to this type of electricity theft.

But illegal mining operations have been consistently cropping up all across the world. Malaysia has reported a 300% upsurge in this type of activity since 2018. This year, incidents have cropped up in countries ranging from Thailand to Kuwait. And just this week, police in Hong Kong arrested two men on suspicion of diverting electricity from care homes for the disabled in order to mine crypto.