Iran has been grappling with severe power blackouts in its capital, Tehran, and neighboring provinces over the past few months. While officials have pointed to various causes for the crisis, crypto mining has emerged as a significant factor contributing to the electricity shortage.
The country’s heavily subsidized electricity rates have made it a prime location for Bitcoin mining since 2022. With electricity costs as low as $0.002 per kilowatt-hour, Iran offers the cheapest electricity for mining in the world. This attractive rate has lured miners to the country, as electricity expenses make up the bulk of Bitcoin mining costs.
At present, the cost of mining one Bitcoin in Iran is estimated at $1,324, a stark contrast to the $100,000 in the United States or $300,000 in Ireland. The surge in unauthorized mining operations has put a strain on Iran’s power grid, with the electricity used by 230,000 unlicensed devices equaling the total power demand of Markazi province, a key industrial hub.
In response to the unauthorized mining activities, Tehran has introduced a reward system to encourage citizens to report any unlicensed crypto-mining equipment. The CEO of Iran’s state electricity company, Tavanir, emphasized the negative impact of these operations on the country’s power grid and called for stricter regulations.
Public frustration has mounted as Iranians have exposed previously undisclosed mining farms, often located in government-supported facilities like mosques or schools that receive discounted or free electricity. The unauthorized mining activities have led to disruptions and problems within the power grid, prompting the government to crack down on illegal operations.
In a bid to regulate the crypto industry, the Central Bank of Iran recently approved a new framework that mandates licensing for crypto brokers and custodians. The policy aims to ensure compliance with anti-money laundering laws, counter-terrorism financing regulations, and tax obligations. This move signifies Iran’s growing involvement in the cryptocurrency market amid geopolitical tensions and economic challenges.
While Iranian officials have not directly linked Bitcoin mining to the recent power outages, the public has drawn connections between the two. Iran’s dual strategy of exploring cryptocurrencies while combating unauthorized mining highlights the complex role of digital assets in the country’s economy.
Overall, Iran’s foray into crypto mining and regulation reflects the evolving landscape of digital currencies in the global market. As the country navigates through power shortages and economic uncertainties, the government’s approach to balancing crypto activities and energy consumption will be crucial for the sector’s future growth.