Trading in the digital currency cryptocurrency is prohibited in Iran. A power outage will be experienced by 118 cryptocurrency miners.
Image credit: iStock
Iran has a love-hate relationship with the crypto mining industry. Despite knowing the promise of crypto as a way to evade international sanctions, the government is once again restricting crypto mining activity in order to relieve the strain on the country’s power supply.
According to a report, Iran’s power industry spokesman, Mostafa Rajabi Mashhadi, said in an interview with state TV that electricity to all 118 government-authorized mining operators in Iran will be cut off from June 22 due to seasonal spikes in power demand.
Mashhadi stated electricity demand will exceed 63,000 megawatts this week. Last August, consumption peaked at 67,000 megawatts. With Iran already subject to US sanctions on foreign trade, cryptocurrency could be a way to circumvent them.
However, the implementation of the most recent policy suggests that excessive power consumption is a more immediate concern at this time.
Countries have long considered and used Bitcoin as a means of circumventing trade embargoes. The US has imposed broad sanctions on Iran, effectively preventing it from accessing the international financial system.
Iran recognized the cryptocurrency mining industry in 2019 and began issuing licenses to miners, who must pay higher electricity rates and sell their mined bitcoins to Iran’s central bank.
Andre Francois on Unsplash
However, the country has repeatedly shut down crypto mining operations. Last year, when electricity demand was at an all-time high, the government ordered two shutdowns to relieve pressure on its power infrastructure.
Before the bans, cryptocurrencies were booming in Iran. In May of last year, the blockchain analytics firm Elliptic estimated that the country accounted for 4.5% of all Bitcoin mining. According to the Cambridge Centre for Alternative Finance, this ratio had dropped to 0.12% in January (CCAF).
Other countries’ miners have defied regulatory agencies. Between July and August of last year, China’s crypto hash rate, which measures the computational power used by proof-of-work cryptocurrencies like Bitcoin, dropped to zero, following the country’s toughest anti-crypto mining crackdown.
However, the industry appeared to have quickly recovered. According to CCAF, China accounted for 30% of the world’s crypto hash rate in September and nearly 40% in January, ranking second only to the US.
The rebound suggested that underground mining was likely well underway in China, where crypto trading is also prohibited. “Access to off-grid electricity and geographically scattered, small-scale operations are among the major means used by underground miners to hide their operations from authorities and circumvent the ban,” according to a CCAF analysis.
According to CCAF, the sudden drop and resurgence of China’s hash rate suggested that its miners may have been operating covertly right after the ban by rerouting their data through proxy services. They may have become less concerned about hiding their locations as time passed and the regulation took effect.
Leave a Reply