Illegal Cryptocurrency Mining Likely Behind Iran’s Rolling Blackouts

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As a researcher with extensive experience in the field of global finance and energy economics, I find the situation in Iran regarding illegal cryptocurrency mining and its impact on power outages to be both fascinating and concerning.

In the recent months of October and November, unlawful Bitcoin mining operations have been identified as a leading factor behind the frequent power blackouts occurring in Tehran and surrounding regions of Iran.

It turns out that illegal cryptocurrency mining has been a significant factor exacerbating Iran’s ongoing power shortage, according to official reports detailing the reasons behind their rolling blackouts.

Crypto Miners Exploit Iran’s Government-Subsidized Electricity

In October and November, Tehran, Iran’s capital city, along with its surrounding provinces, experienced a significant energy crisis that led to power outages, affecting both residents and businesses. Although multiple elements might have contributed to these disruptions, there are suspicions that illegal Bitcoin mining operations played a substantial role in exacerbating the situation.

Due to subsidized electricity rates, Iran has emerged as a popular destination for crypto mining globally since 2022. The low estimated cost of mining attracts many cryptocurrency miners who leverage the country’s affordable power resources. Crypto mining was allowed again in 2022 after the Iranian government lifted a ban on energy-intensive activities, following widespread power outages in various cities across the nation.

Following the removal of the ban, Iran has allowed cryptocurrency mining to carry on; however, this will be subject to stringent regulations. The Ministry of Industry, Mine, and Trade (MIMT) announced that it would grant licenses exclusively to mining facilities powered by renewable energy sources. This is aimed at reducing strain on power grids and preventing blackouts.

In Iran, electricity is incredibly cheap at approximately $0.002 per kilowatt-hour, making it the least expensive worldwide. Conversely, the cost of mining a single Bitcoin in Iran is estimated to be about $1,320, while it costs around $100,000 in the United States and an astounding $300,000 in Ireland.

As a crypto investor, I’ve recently come across some concerning news regarding illegal mining activities in certain regions. Mostafa Rajabi Mashhadi, CEO of Iran’s state electricity company, Tavanir, has shed light on this issue and its significant impact on the power grid. He explained that the energy consumed by approximately 230,000 unauthorized devices is equivalent to the total electricity demand of a crucial manufacturing region, the Markazi province. This revelation underlines the need for proper regulation and management of cryptocurrency mining operations to prevent such strain on our infrastructure.

The news agency Iran International stated that the government has initiated a reward system offering one million toman (approximately $24 USD) to encourage citizens to inform on unauthorized cryptocurrency mining equipment. This measure is being implemented due to power outages experienced across the nation, as extreme heatwaves have pushed temperatures up to 45 degrees Celsius in certain regions of the country.

Mashhadi explained the challenges to Iran International, stating:

Unscrupulous people are taking advantage of subsidized electricity and public infrastructure to illegally mine digital currencies. This unlawful activity has resulted in a sudden spike in energy usage, leading to numerous issues and disturbances within the nation’s electrical system.

Sanctions and Geo-Political Tension Drive Iran to Turn to Crypto

Iran has turned to cryptocurrencies as a means of addressing economic difficulties and finding workarounds for U.S. sanctions that limit their engagement with global financial systems. The affordable energy infrastructure and growing demand for ways to join the international economic market have compelled Iran to enter the digital currency sphere.

As a cryptocurrency investor, I’m excited about the recent development in Iran where their Central Bank has approved a new regulatory framework for digital currencies. This move seems to be a balanced approach towards overseeing the industry while promoting economic growth. The Tehran Times reported that the country is adopting a unified strategy for regulation, with a policy requiring licensing for brokers and custodians in the crypto space. This will ensure that they comply with anti-money laundering (AML) laws, counter-terrorism financing (CTF) regulations, and their tax responsibilities.

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2024-12-14 11:03