Iran Renews Ban on Crypto Mining to Stave Off Electricity Outages

Iran’s government is temporarily banning cryptocurrency mining as officials blame the energy-intensive industry for unplanned blackouts during the cold winter months.

The state-run electricity firm Tavanir told licensed mining facilities to voluntarily suspend their operations in a bid to cut down on energy-consumption in a number of Iranian cities. It promises to allow crypto miners to come back online soon, but the permission will be restricted to those operating legally.

However, the future remains uncertain of these miners being able to stay online as the country may revert its harsh view of cryptocurrency mining taking a toll on the electricity grids in lieu of the economic benefits.

Tavanir warned that illicit cryptocurrency miners are taking a toll on the country’s power grid and causing at least “10 percent of electricity outages this winter” in Iran. According to industry estimates, 85% of the mining operations being carried out in Iran, which hosts around 5% of Bitcoin miners globally, are illegal.

Cryptocurrencies are used to bypass US sanctions

In a statement published by the official government news agency IRNA, officials blamed unlicensed cryptocurrency miners for using vast amounts of electricity. Illegal bitcoin mining in Iran consumes an estimated 2,000MW a day, according to the Cambridge Bitcoin Electricity Consumption Index, a project of the University of Cambridge.

This isn’t the first time cryptocurrency miners have been accused of ‎illegally using subsidized electricity. Local news media also reports on frequent police raids on illegal farms for cryptocurrency.

Earlier this year, the government had conducted other raids as well to track down crypto miners all over the country. The most recent ban was implemented in May, then miners were allowed to come out to play in September after the risk of power outages eased.

Iran’s authorities are using cryptocurrency to evade the wide-ranging US sanctions, which deprived the country of its major source of hard currency and revenue, oil exports.

Iran has established a legal framework for crypto mining since 2019, offering cheap power and requiring miners to sell their bitcoins to the central bank. The Islamic Republic allows miners to use their coins to pay for imports of authorised goods. However, they are required to register with the government and pay extra for electricity. The use of household electricity to mine cryptocurrencies is not legal. And, those found to be flouting the law could face heavy fines.