Bitcoin might seem like a digital Wild West, but did you know that 12% of UK adults now own crypto?
For anyone tempted to get involved in crypto mining, the two big questions are: "Is crypto mining legal in the UK?" and “Is crypto mining profitable?”
The good news? Yes, crypto mining is legal in the UK. If it weren’t, approximately 7 million Brits who own cryptocurrency would be in serious trouble. Any individual can become a bitcoin miner, without having to ask for access or permission. Crypto mining can be very profitable, too.
The bad news? Crypto mining energy consumption is high, and there’s a “shortcut” that many crypto miners might be tempted to try – unaware that it’s a life-threatening one.
The Basics of Bitcoin and Crypto Mining
Bitcoin is a cryptocurrency, a form of digital money, that operates on the blockchain – a digital ledger of transactions. There are other cryptocurrencies, but Bitcoin is the most well known.
In simple terms, crypto mining is how new digital currency is created. It involves solving complex mathematical puzzles in exchange for an opportunity to acquire bitcoin.
Essentially, it’s a high-stakes global competition where participants race to win the right to add new transaction blocks to the blockchain. Winners are rewarded with the block reward (an amount of bitcoin), and transaction fees (fractions of bitcoins).
It’s as complex as it is exciting! This makes it important to weigh up the costs, competition, and evolving regulations before diving in.
Over time, mining has become increasingly sophisticated, requiring powerful hardware that speeds up the process. As more miners enter the game, the difficulty of mining increases to prevent bitcoin from being issued too quickly. Block rewards also halve every four years, making mining even more expensive.
Beyond these risks, it’s vital to be aware of the physical dangers. Crypto mining may be legal in the UK, but electricity theft to power bitcoin mining operations is a growing concern.
UK Regulations on Crypto Mining
Crypto mining is a booming industry in the UK, with a market turnover of approximately £12.1 billion, as of September 2024.
Crypto mining is legal in the UK, but crypto regulation in the UK is currently fragmented. The industry is still in its infancy and there’s no single document that outlines the regulatory requirements for all industry participants.
Ahead of the general election, the Labour party stated its aim to make the UK a global hub for crypto asset technology and investment. That ambition requires UK regulations to evolve to address the risks and vulnerabilities of crypto asset businesses – risks like the recent collapse of platforms like Celsius Network, Voyager Digital, and FTX.
The UK government has already started to develop its own regulatory framework to regulate and tax crypto mining activities. It signed the November 2023 Joint Statement with international partners, declaring its intent to deliver the Cryptoasset Reporting Framework (CARF) by 2027.
That same month, it was confirmed that although the original plan had been to introduce UK crypto regulation in two phases, with the issuance and custody of stablecoins as phase one, followed by the broader phase two, these will now be implemented together in a single phase.
For the time being, offering trading services as a cryptocurrency business requires authorisation from the FCA. However, you can still mine and trade bitcoin as an individual, at home, without needing a licence.
Cryptocurrency is now classified as personal property rather than currency, under the 2024 Property (Digital Assets etc.) Bill, which aims to provide owners with increased legal protection against fraud and scams, while positioning the UK as a leader in global crypto regulation.
You’ll also need to report profits to HMRC:
- Income Tax: Applied to crypto trading profits, including mining activities.
- Capital Gains Tax: Applied to gains from selling cryptoassets.
Crypto mining taxation depends on your level of involvement:
- Mining as a hobby: Reported as "miscellaneous income."
- Mining as a business: Taxed as trading profits.
Crypto mining can be profitable. However, according to the HMRC Cryptoassets Manual, mining-related expenses such as equipment and electricity used cannot be counted as expenses when calculating taxes.
This leaves some crypto miners facing a deadly choice.
Why Mining Requires So Much Electricity
Crypto mining energy consumption can throw a big spanner in the works for crypto miners. Solving these complex calculations requires high-powered computers. Those computers require massive amounts of electricity to run and keep cool and prevent overheating. It can be extra tough to turn a profit considering mining gear quickly becomes obsolete, as newer, more efficient technology replaces it.
To maximise profits, miners often connect thousands of machines – sometimes entire warehouses – to the network. It’s no surprise then that many crypto miners are looking for ways to lower the cost of their energy bills.
Electricity theft for bitcoin mining is becoming a widespread issue. Learn the six things to know about electricity theft here.
Why Some Miners Steal Electricity
Though crypto mining can be profitable, rising energy costs often cut into profits. As miners seek cheaper ways to power their rigs, some turn to illegal methods to cut costs and keep operations running – electricity theft for bitcoin mining.
In the U.S, Cohasset assistant facilities director, Nadeam Nahas, set up mining equipment in a crawl space of a middle school, stealing nearly $17,500 of electricity between April and December 2021. The school’s director of facilities grew suspicious after noticing duct tape, unusual wiring, and computers out of place – leading to the discovery. Nahas was charged with vandalising a school and fraudulent electricity use.
Here in the UK, authorities investigating a power overload at a substation in Leicestershire in 2021 uncovered a secret mining operation in a nightclub and industrial unit. Sanjay Singh’s operation stole £32,000 worth of electricity to mine crypto on 200 computers. He was charged with two counts of abstracting electricity, and sentenced to 13 months and two weeks in prison.
That same year, police in the West Midlands discovered a bitcoin mining operation at a Sandwell industrial estate while searching for a cannabis farm. Instead of plants, they found 100 mining rigs hooked up to an illegal electricity connection. The site had been flagged after a tip about lots of people visiting the unit, and after a police drone detected unusual heat patterns. £16,000 worth of of electricity had been stolen each month. The hunt continues to find the criminals responsible.
In January of 2025, law enforcement in Thailand’s Chon Buri province seized nearly 1,000 bitcoin mining rigs from a company that had installed solar panels but not connected them to the mining rigs. Officials estimate the cost of the stolen electricity at approximately $2.9 million. The authorities have not yet identified those responsible.
Electricity theft is illegal and extremely dangerous. If you spot any of the signs, report them immediately to Stay Energy Safe.
The Dangers of Energy Theft for Crypto Mining
Cryptocurrency laundering – which involves using powerful computers for illegal bitcoin mining – increased among criminal groups during the pandemic. Since then, rising energy costs have made electricity theft for bitcoin mining more tempting.
Energy theft costs energy companies up to £1.4 billion each year in stolen gas and electricity, adding around £50 to every paying customer’s energy bill. However, electricity theft isn’t just costly for providers and innocent consumers; it’s a serious crime with dangerous consequences. The dangers of crypto mining and the energy theft that often powers it can devastate entire communities.
Tampering with or bypassing electricity meters to avoid paying for energy can leave live wires exposed and appliances live to the touch. It puts anyone nearby, or using them, at risk of electric shocks, electrical fires, and explosions which can cause injury and even death. The penalties for electricity theft are also high – an unlimited fine and up to five years in prison.
One such devastated community is Romford. In 2018, eight-year-old Harvey Tyrrell was electrocuted and tragically killed in the back garden of a pub while trying to retrieve his football. The pub owner was found guilty of manslaughter and electricity theft and was sentenced to nine years in prison.
With bitcoin mining on the rise, staying safe means being aware of the dangers of crypto mining when miners are stealing energy to power it.
There has been a 304% increase in reports since 2018 with 12,653 reports of energy theft being passed on in 2024, up 9.5% compared to 2023, up 20.54% compared to 2022, and up 77.66% compared to 2021.
This shows that more and more people are understanding the dangers of energy theft and are speaking up to stay safe.
Bitcoin mining is legal in the UK, but putting people’s lives in danger for profit is not okay. Electricity theft for bitcoin mining is never worth the risk.
You can learn more about the signs, dangers and consequences by reading our comprehensive guide to energy theft, or by visiting our electricity theft page.
Suspect someone of stealing electricity? Report it 100% anonymously to Stay Energy Safe.
Fill out our online form or call 0800 023 2227. We don’t see your phone number or IP address, so we can never track the information you give back to your device; all we ask you to provide are the details of where you think the theft is taking place, along with any other information you might have.
Your report could save lives.