Bitcoin miners in Iran get the green light to resume operations after a four month hiatus — but it could just be temporary
- The Iranian government has officially lifted the ban on mining for cryptocurrency for licensed operators.
- However, around 85% of the cryptocurrency mining in the country occurs illegally, taking a toll on this power grid.
- The future of cryptocurrency mining in the country remains uncertain with the winter months expected to take a toll on the electricity grid and
US sanctionsstill weighing heavy on Iran’s economy.
AdvertisementMiners in China may be getting pushed out of their country, but the mining industry in Iran just got the green light to legally resume operations. The Gulf nation was forced to ask miners to shut shop due the extreme summer heat taking a toll on the country’s power grid in May.
Now that the hottest months of the year are out of the way, miners can come out to play without the risk of power outages. According to the Cambridge Bitcoin Electricity Consumption (CBEC) Index, Iran is home to around 4.6% of miners globally.
However, the future remains uncertain of these miners being able to stay online with the onset of winter triggering another round of electricity shortages. Just as air conditioning takes its toll on the power grid during the summer months, the energy requirement for heaters during the night ramps up as temperatures dip to between 1 and 8 degrees Celsius.
Only ‘licensed’ cryptocurrency miners are allowed to come back online
According to Iran state-run electricity firm Tavanir, there are only 50 Bitcoin farming plants that have a legal license to operate within the country. They only consume 300 megawatts of electricity. However, 85% of the mining operations being carried out in Iran are illegal.
On Wednesday, September 29, Ali Sahraee — CEO of the Tehran Stock Exchange (TSE) — reportedly resigned after cryptocurrency mining rigs were discovered in the TSE’s basement during a raid.
During the four-month ban, authorities conducted many other raids as well to track down crypto miners all over the country — big and small. The current permission for crypto miners to come back online is restricted to those operating legally. The use of household electricity to mine for Bitcoin, Ethereum and others is still not legal. And, those found to be flouting the law could face heavy fines.
US sanctions may leave Iran with no choice but to use cryptocurrencies for international trade
When the summer cryptocurrency ban was implemented, President Hassan Rouhani was at the helm. However, with
Raisi, a conservation hardliner, has no plans to buckle under the pressure of the US government limiting Iran’s nuclear program in exchange for easing the Countering America’s Adversaries Through Sanctions Act (CAATSA). He has reiterated, on multiple occasions, that Tehran will not agree to any deal until and unless the sanctions are completely removed — not just relaxed.
Not only do the sanctions limit Iran’s ability to conduct international trade but they also isolate the country from the global monetary system. Cryptocurrency is a roundabout way of tapping into that market with any help from the US.
Iranian officials and traders have reportedly become adept at evading sanction using cryptocurrency to avoid the banking system. Transfer of the actual cargo happens as covert ‘ship-to-ship’ transfers while still at sea.
It's worth noting that Iran has the fourth-largest oil reserves globally but it cannot leverage them due to economic sanctions. With some of the cheapest electricity prices in the world, cryptocurrency may be one the ways for the country to keep its economy alive without having to bend to the US’ will.
For a more in-depth discussion, come on over to Business Insider Cryptosphere — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve.
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