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Iran to Shut Down Crypto Mining Farms as Energy Crisis Deepens

Over the past two years, Iranian authorities have shut down about 6,914 unregistered crypto companies.

Licensed crypto-mining factories in the Islamic Republic will be required to disconnect their power-hungry coin-minting devices on June 22 this year, the start of the Iranian month of Tir.

Since 2020, when the administration of Tehran’s main electricity company began blaming crypto mining for straining the country’s energy supply, the government has cracked down on illegal crypto mining .

Despite being aware of the potential of crypto as a way to circumvent trade embargoes, local authorities are restricting cryptocurrency mining in an effort to reduce the load on the country’s power grid.

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Power-Hungry Bitcoin Miners in Iran

Without proper documentation, crypto operations consumed approximately 645 megawatts of electricity. The government estimates that this figure is equivalent to the annual consumption of three regions of the country.

Authorities report that thousands of illegal mining equipment have been seized in recent years. In May 2012, the government enlisted its intelligence ministers to prosecute illicit miners. A prize of 200 million rials (about $900) was offered to informants who helped locate the illegal farms.

The Iranian authorities reportedly seized more than 220,000 pieces of mining equipment and closed over 6,000 mining operations in September of last year. Image: Yahoo Finance.

In an interview with Iranian state television, Mostafa Rajabi Mashhadi, spokesperson for the country’s power industry, said power to Iran’s 118 licensed crypto mining facilities will be cut on June 22 in anticipation of a seasonal increase in the demand for electricity.

As electricity consumption approaches 63,000 megawatts, Mashhadi also warned that power shortages could worsen over the coming days.

Using Crypto to Evade Sanctions

In 2019, Iran approved the mining of cryptocurrencies as an industrial industry. Several companies have since applied for licenses and started minting digital currencies, taking advantage of the cheap energy provided by Iranian power plants.

BTC total market cap at $403 billion on the daily chart | Source: TradingView.com

Cryptocurrency has been considered and used to evade international sanctions for some time. The United States has imposed sweeping restrictions on Iran that effectively prevent it from accessing the international banking sector.

In September last year, the Iranian government reportedly seized more than 220,000 pieces of mining equipment and shut down around 6,000 mining facilities. Six months later, 900 more Bitcoin mining rigs were added to the list.

Elliptic, a Blockchain analytics firm, reported in May 2021 that around 4.5% of all cryptocurrency mining took place in Iran. According to the Cambridge Center for Alternative Finance, the volume has since been reduced to 0.12% in January this year.

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Featured image from Ultcoin365, chart from TradingView.com