Illegal Cryptocurrency Mining Likely Behind Irans Rolling Blackouts
Illegal cryptocurrency mining has emerged as a significant contributor to the major power outages experienced in Irans capital city, Tehran and neighbouring provinces over October and November.
While authorities listed several causes for the rolling blackouts, illegal crypto mining was found to be one of the biggest causes of Irans power crisis.
Crypto Miners Exploit Irans Government-Subsidized Electricity
Irans capital city, Tehran and its neighbouring provinces faced a major power crisis in October and November, with electricity cuts disrupting peoples lives and businesses. While several factors are likely involved in the disruptions, illegal cryptocurrency mining has been named a major contributing factor.
Irans government-subsidized electricity has become a global hotspot for crypto mining since 2022. With the world's lowest estimated cost of mining, many cryptocurrency miners have exploited the countrys cheap electricity. Cryptocurrency mining was able to resume in 2022 after the Iranian government lifted a four-month ban on these energy-consuming activities after multiple cities across the country suffered crippling blackouts.
After the government lifted the ban, Iran said crypto mining could continue, but only under strict conditions. Irans Ministry of Industry, Mine, and Trade (MIMT) said it would only issue licenses to mining farms supplied by power from renewable energy sources to ease the stress on power plans and avoid blackouts.
Electricity in Iran costs a mere $0.002 per kilowatt-hour, the lowest in the world by a large margin, according to data by Statista. The cost of mining one Bitcoin in Iran is estimated to be around $1,320, compared to the $100,000 it costs in the United States or the $300,000 in Ireland.
Mostafa Rajabi Mashhadi, CEO of Irans state electricity company, Tavanir, recently highlighted the impact of illegal mining activities on the regions power grid. Mashhadi explained that the power used by 230,000 unlicensed devices equals the total electricity demand of a key manufacturing hub, the Markazi province.
News agency Iran International reported the capital introduced a bounty of 1 million toman to incentivize citizens to report unlicensed crypto mining equipment. The bounty, roughly $24 at the current exchange rate, came into play as the country faced power shortages amid a severe heatwave that recorded temperatures of 45 degrees Celsius in some parts of the country.
Mashhadi explained the challenges to Iran International, stating:
Opportunistic individuals have been exploiting subsidized electricity and public networks to mine cryptocurrencies without proper authorization. This unauthorized mining has led to an abnormal surge in electricity consumption, causing significant disruptions and problems within the country's power grid.
Sanctions and Geo-Political Tension Drive Iran to Turn to Crypto
Iran has embraced cryptocurrency to mitigate economic challenges and circumvent US-imposed sanctions that restrict the countrys access to global financial networks. The low-cost energy framework and increased need for ways to participate in the international economic framework have forced the country to participate in the cryptocurrency arena.
Last week, the Central Bank of Iran (CBI) approved a new regulatory framework for cryptocurrencies to balance the oversight of the industry with economic development. The Tehran Times reported the country is taking a unified approach to regulating the industry with a policy mandating licensing for crypto brokers and custodians to ensure compliance with anti-money laundering (AML) laws, counter-terrorism financing (CTF) rules, and tax obligations.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Text source: Crypto Daily™
