Mexico’s Federal Attorney General’s Office, Navy and Puebla State Secretariat of Public Security uncovered a suspected illegal cryptocurrency mining farm during a joint raid in Tlaola, Puebla. The discovery matters because authorities are investigating possible electricity theft and whether crypto assets generated at the site could have been used to launder funds linked to illegal activity.

The operation allegedly used electricity illegally from hydroelectric infrastructure belonging to the Federal Electricity Commission, or CFE, Wired reported.

Site found near hydroelectric infrastructure

The site is in the Sierra Norte de Puebla near the Necaxa dam, part of the region’s hydroelectric system. Local law enforcement agencies have conducted operations in the area for several years to identify sites that may be linked to illegal electricity use.

Authorities said the farm’s location and proximity to energy infrastructure helped draw their attention. Francisco Sanchez Gonzalez, a vice admiral and head of Puebla’s Secretariat of Public Security, said authorities suspect that other hidden mining farms may be operating in Tlaola.

“This activity consumes a lot of energy and creates a lot of noise, so these sites are sought out in remote and very isolated places. That caught our attention.”

Authorities said the infrastructure at the site was operational. Officers found about 300 GPUs, a transformer, about 80 medium-voltage terminals and eight satellite internet antennas.

Cryptocurrency mining is not banned in Mexico. The investigation therefore focuses primarily on whether the operation obtained electricity illegally.

The Cambridge Bitcoin Electricity Consumption Index estimated that average global electricity consumption associated with bitcoin mining was about 120 terawatt-hours in 2023.

Authorities examine possible money laundering

Puebla’s Secretariat of Public Security said investigators are also examining whether crypto assets obtained through the operation could have been used to make illicit funds appear legitimate.

“Authorities are analyzing whether virtual assets obtained through this infrastructure could have been used to give a lawful appearance to resources linked to illegal activity.”

The inquiry comes amid broader concerns over the use of cryptocurrencies by criminal organizations to move and launder funds. Studies of Mexican drug cartels have described schemes in which proceeds from the illegal fentanyl trade were converted into crypto assets and later exchanged into yuan through networks of underground exchangers.

Electricity theft remains a separate focus. According to the latest available data from CFE Distribución, electricity theft, meter tampering and illegal connections were associated with consumption of 6,346 gigawatt-hours from January through July 2024. The commercial value of that electricity was estimated at about 13.8 billion Mexican pesos, or $813.64 million.

Other countries have also reported enforcement actions against illicit mining operations. Thailand recently uncovered an illegal crypto mining network with annual turnover of more than $300 million, while Malaysia reported results from its crackdown on illegal crypto mining since 2022.

Source: Incrypted