- Iran has a changeable relationship with crypto, recently reversing a trading and possession ban.
- Iran ranks among the top 10 Bitcoin mining countries, partly thanks to its electricity subsidies.
- Iran is facing a heat wave and is reportedly offering rewards to expose illegal crypto mining and relieve pressure on its ailing energy grid.
Crypto mining, fundamental to proof-of-work chains like Bitcoin and Litecoin, is the backbone of network decentralization. Despite its energy-intensive and costly nature, it has become highly profitable, with miners worldwide earning millions daily. This potential for substantial returns has turned crypto mining into a major industry.
However, the quest for profit has also spurred a rise in illicit mining activities, such as electricity theft and unauthorized operations. This issue has become particularly acute in Iran, facing severe power shortages due to an unprecedented heatwave. Iranian authorities are reportedly offering bounties for information on illegal mining operations to address this.
Crypto Mining Blamed for Power Outages
Iran is battling a severe heatwave, with temperatures soaring to 50°C (122°F) in some areas. This extreme weather has stretched the country’s electricity infrastructure to its breaking point, prompting officials to crack down on illegal cryptocurrency mining. The government has launched a bounty program to address this, offering rewards for information on unauthorized mining setups.
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The intense heat has spotlighted chronic issues in Iran’s power sector, including outdated, inefficient technology and an aging grid infrastructure. These problems have led to unstable electricity supplies, causing widespread outages and disrupting industries and government services.
Mostafa Rajabi Mashhadi, CEO of state electricity firm Tavanir, identified unauthorized crypto mining as a major factor in the power outages. In response, authorities are reportedly offering rewards of one million tomans ($20) for information leading to the discovery of each piece of illegal mining equipment.
The CEO revealed that authorities have uncovered over 230,000 pieces of illegal mining to date, highlighting the scale of the problem. These operations were found in unexpected places like schools and mosques, which receive subsidized electricity.
Iran is a Major Bitcoin Country
The energy sector in Iran is heavily subsidized, with the International Energy Agency estimating subsidies between $30-137 billion over the past decade. This substantial subsidization makes Iran one of the world’s top energy-subsidized countries, creating a fertile ground for energy-intensive activities like crypto mining.
Iran currently accounts for 3.1% of the global Bitcoin hash rate, ranking eighth worldwide. This prominence is particularly significant given that Iran trails just behind countries like Germany and Malaysia, each holding 4.6% of the hash rate. The country’s rise in this sector was accelerated by China’s 2021 crypto-mining ban, which led to an exodus of miners to countries such as Iran, Russia, and Kazakhstan.
Crypto investors in Iran have received mixed signals from authorities. Although the government banned crypto trading and possession in 2018, it reversed the ban a year later due to their potential for bypassing U.S. sanctions.
To legally meet crypto mining requirements in the country, each piece of mining hardware must be registered, and a fee must be paid before a license is granted. Additionally, miners must obtain an establishment and an operation permit to comply with Iran’s mining laws.
On the Flipside
- Iran’s official currency is the rial, but the country also uses the toman, which is one toman equivalent to 10 rials.
- The minimum monthly wage in Iran is around $230, making a $20 bounty payment somewhat significant.
- Daily BTC mining revenue has crashed to $28.7 million from a 2024 high of $107.8 million on April 20.
Why This Matters
As Iran combats illegal crypto mining amid power shortages, it highlights the ongoing struggle between economic opportunity and energy sustainability.
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