Iran cracks down on crypto miners as electricity demand rises

Iran cracks down on crypto miners as electricity demand rises

Iran will cut power to all of its 118 licensed crypto mining centers starting June 22 as summer temperatures drive up electricity demand, Energy Ministry spokesman Mostafa Rajabi Mashhadi said, according to a Bloomberg Report.

The country's energy needs continue to reach new highs, the ministry said. “Forecasts indicate that consumption demand will exceed 63,000 megawatts this week, which means we will have to restrict electricity supply,” said Rajabi Mashhadi said in an interview translated into English.

This is the third time Iran has suspended local crypto mining activities in the past year to prevent power outages. The government before Operations suspended in winter and summer 2021 due to the same seasonal power issues.

Crypto miningin Iran

The Iranian government officially recognized Cryptocurrency mining as a legitimate business activity in 2019 and Over 1,000 crypto mining licenses issued to bring capital into the heavily sanctioned country. Miners have to pay a tax on their electricity and sell their mined cryptos to the Iranian central bank.

Still, cheap electricity attracted local miners. Iran's Bitcoin mining accounted for 6.9% of the total Bitcoin hash rate as of June 2021, according to the Cambridge Center for Alternative Finance (CCAF), placing it comfortably in the top 10 Bitcoin mining countries in the world.

At the same time, increasing cases of illegal Bitcoin mining in Iran have led to regulatory scrutiny. Iranian police confiscated 7,000 mining computers at an illegal cryptocurrency farm in June 2021, Reuters reported.

It is also becoming increasingly common for Iranians to mine Bitcoin at home using the country's subsidized household electricity. Images of mining machines running in a mosque and receiving free electricity in Iran have surfaced online, according to a blockchain analytics company Elliptical.

“Access to off-grid electricity and geographically dispersed, small-scale operations are among the key tools used by underground miners to hide their operations from authorities and circumvent the ban,” CCAF said in an analysis.

Between 2015 and 2021, Bitcoin mining flowed more than $186 million into Iranian cryptocurrency services, a Chain Analysis Crypto Crime Report showed. The report also found that illegal Bitcoin miners accounted for around 85% of cryptocurrency activity in the country.

However, mining activity in the country appears to have slowed down. As of January 2022, Iran reportedly accounted for a paltry 0.2% of the global hash rate Cambridge Bitcoin Electricity Consumption Index. This spring, the Iranian government drafted new measures to increase penalties for illegal crypto mining using subsidized electricity, including increasing fines by a minimum of three times and a maximum of five times, as well as imprisonment of the perpetrator Local media.

Unauthorized crypto mining “activities are a threat to the country’s energy security, they cause enormous damage to the national electricity grid… and therefore the consequences must be proportionate to the damage.” said Mohammad Khodadadi Bohlouli, the official in charge of powering legal crypto mining centers at the Iran Power Generation and Transmission Company, or Tavanir.

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The post “Iran Cracks Down on Crypto Miners as Electricity Demand Surges” is not financial advice.