Discovery of an Illicit Cryptocurrency Farm
Authorities at both federal and state levels have uncovered an illegal cryptocurrency farm situated in Tlaola, a municipality within the Sierra Norte region of Puebla. This operation allegedly exploited the Federal Electricity Commission’s (CFE) hydroelectric facilities to extract substantial amounts of energy unlawfully. This discovery emerges at a time when Mexico is intensifying its efforts to combat the theft of electricity, a concern that has escalated in recent years, partially due to the misuse of certain technologies.
The detection and subsequent seizure of the site were the results of a coordinated operation involving the Attorney General’s Office (FGR), the Navy Secretariat, and the State Public Security Secretariat (SSP) of Puebla.
Upon inspection, officials found a functioning electrical and technological infrastructure, which included a pedestal transformer, approximately 80 medium-voltage terminals, eight satellite internet antennas, and nearly 300 graphics processing units (GPUs). Over the past few years, state authorities have conducted various operations throughout the Sierra Norte de Puebla to identify and dismantle installations linked to electricity theft. This area is home to the Necaxa dam, part of the Necaxa hydroelectric system, managed by the private company Generadora Fénix, while the infrastructure itself is federally owned.
Concerns Over Energy Theft and Cryptocurrency Mining
Vice Admiral Francisco Sánchez González, head of the state’s SSP, expressed suspicions regarding the covert presence of cryptocurrency mining farms in Tlaola, largely due to its proximity to the dam and the region’s geographical characteristics. “This activity consumes significant amounts of energy and generates considerable noise, leading to the selection of remote locations within communities. This raised our concerns,” he explained during a press conference.
Cryptocurrency mining is a process in which computer systems perform cryptographic calculations to validate and record transactions on a blockchain. In networks such as Bitcoin, participants compete to add new blocks, receiving cryptocurrency rewards and transaction fees in return.
This process, however, requires vast amounts of electrical energy. According to the Cambridge Bitcoin Electricity Consumption Index, the global electricity consumption linked to Bitcoin mining is estimated to have reached an average of 120 terawatt-hours (TWh) in 2023 alone. In Mexico, cryptocurrency mining is not illegal; thus, as Sánchez elucidates, the investigations surrounding the farm discovered in Tlaola primarily aim to ascertain whether energy theft occurred.
Exploring Links to Organised Crime
Despite this focus, the SSP is not ruling out other investigative avenues. “Authorities are examining whether the virtual assets generated through this infrastructure may have been used to lend an appearance of legitimacy to resources related to illicit activities,” the agency stated in a press release. Various reports have documented that criminal organisations, many linked to drug trafficking, mine crypto assets to facilitate money laundering and the transnational movement of illicit funds.
A report titled “The Use of Artificial Intelligence by High-Risk Criminal Networks” indicates that the Sinaloa Cartel operates triangulation networks with clandestine Chinese exchange houses, specifically designed to convert profits from fentanyl trafficking into crypto assets that are subsequently exchanged for yuan. “These operations not only evade the international banking system but also replace it with a decentralised financial architecture that resists institutional traceability,” the document highlights.
Meanwhile, experts suggest that the rise of cryptocurrencies and their usage, both legitimate and illicit, has exacerbated electricity theft, a long-standing issue in Mexico that results in significant financial losses for public finances. The latest available data on non-technical losses released by CFE Distribution indicates that between January and July 2024, instances of theft, meter tampering, and illegal connections were associated with a consumption of 6,346 gigawatt-hours, with an estimated commercial value of 13.8 billion pesos.