How Iran uses Bitcoin mining to mitigate the impact of Sanctions
Economic sanctions are commercial and financial penalties imposed by one or more countries targeting a self-governing state, group, or individual. These can be imposed for a variety of political, military, and social issues. This article is about how Iran, allows its economy to earn millions of dollars by Bitcoin mining. These crypto assets are then used to fund imports and mitigate the impact of sanctions.
As per a recent study conducted by blockchain analytics firm Elliptic that 4.5% of all Bitcoin mining takes place in Iran. These assets earned by mining them are used to purchase imports bypassing the sanctions. The sanctions imposed by the US blocking and banning all Iranian imports including crude oil. Over the past decade, oil exports have plunged more than 70% facing the country with a deep recession. Amidst the sanctions, Iran has turned towards an unlikely solution which is Bitcoin mining.
Conversion of Electricity to Crypto
Cryptocurrency mining requires a mammoth power of electricity to function the high-capacity mining computers. Iran uses oil-powered electricity to power the mining computers. The mining process effectively converts the oil electricity into Bitcoin and other cryptocurrencies.
How it all started
With Iran officially recognizing crypto mining in 2019 the government regulated all nonlicensed farming. The government allowed miners to sell mined assets to Iran’s central bank. Cheap power attracted many overseas investments to Iran, mainly from China making Iran a base for crypto farming.
Iran and Bitcoin Mining
The Elliptic elaborates that exact figures are challenging to determine as per the mining numbers. However, Iran-based miners account for at least 4.5% of all Bitcoin mining. As per data by Iran’s state-managed power generation company approximately 600MW have been consumed by miners. It is projected that this level of mining would generate up to $1 billion in mining revenues to the country.
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Text source: Bitcoin FT
