Iran has announced that it will be cutting off electricity supplies to crypto mining operators that had previously been authorized by the government.
118 digital currency extraction centers will be indefinitely cut off from the national grid at the beginning of July due to the national supply deficit caused by seasonal spikes in electrical power demand.
“Last week, the country’s electricity consumption recorded an all-time high of 62,500 megawatts during peak consumption, which is a significant figure. According to forecasts, this week’s consumption requirement will exceed 63,000 MW, which means we must limit electricity supply,” claimed Rajabi Mashhadi, a spokesperson for Iran’s Ministry of Energy.
Iran’s Crypto Mining Industry
According to Cambridge University, Iran accounts for 0.12% of the Bitcoin network’s hash rate, and has previously been listed among the top 10 countries in the world by BTC mining productivity.
Blockchain analytics firm Elliptic estimates that 4.5% of all Bitcoin mining operations were held in Iran as the adoption of cryptocurrencies allowed the country to circumvent trade embargoes, purchase imports, and bypass sanctions. However, the country lost its share in the bitcoin mining market due to the widespread power shortages experienced in 2021, which saw those numbers decrease to 0.12%.
In 2020, the Trump administration placed sanctions on the country’s financial sector, after which cryptocurrencies became particularly important to Iranians as they helped the country’s citizens to evade the sanctions imposed on the country by the West.
The sanctions marked yet another shock to the Iranian economy, which was already struggling under the weight of almost total economic embargo. Iran’s oil exports have decreased 70% over the past decade, leaving the country in a deep recession and facing multiple socio-economic problems.
Naturally, the country’s cheap electricity supply became the backdrop for the boom of crypto mining. However, Iranians gradually blamed miners for the increasingly common electrical supply shortages and blackouts, though the lack of a sustainable power grid may realistically be the core of the problem.
In 2020, the Iranian government demanded that mining facilities be officially registered with the government, and the identities of owners disclosed. Owners were also required to state the size of the farms, and register the mining equipment utilized.
Unregistered mining facilities are considered illegal, and failure to declare such operations can result in fines and the confiscation of the mining devices. The government has also raised the electricity tariff for miners from $0.1, to $4.6 per kilowatt, per hour.