Amid a severe heatwave and critical power shortages, Iran is ramping up efforts to combat illegal cryptocurrency mining, which officials claim is exacerbating the nation’s electricity crisis and disrupting industrial production.
The country is grappling with its most intense heatwave in 50 years, leading to widespread power outages as the government contends with a significant financial deficit. This energy crisis has severely impacted industrial production, with manufacturers reporting frequent power outages that have repeatedly halted operations.
Iran’s electricity infrastructure is under strain from unauthorized cryptocurrency mining activities, according to Mostafa Rajabi Mashhadi, CEO of Iran’s state electricity company Tavanir. He noted that “opportunistic individuals” have been exploiting subsidized electricity and public networks to mine cryptocurrencies without authorization. This has led to an abnormal surge in electricity consumption, causing substantial disruptions to the power grid.
In response, Iranian authorities have launched a crackdown on illegal miners. To incentivize public assistance, a bounty system has been introduced. “A reward of one million toman (approximately $20) will be given to individuals who report unauthorized cryptocurrency mining equipment,” Rajabi announced.
Cryptocurrency mining involves powerful computers solving complex mathematical problems in exchange for digital currency. This process is highly energy-intensive, often relying on electricity from fossil fuels, which are plentiful in Iran.
Rajabi reported that over 230,000 illegal cryptocurrency mining devices, consuming 800 to 900 megawatts of electricity, have been uncovered. The electricity consumption of these devices is comparable to that of Markazi Province, necessitating the construction of a 1,300-megawatt power plant to supply this amount of power.
In recent years, Iranian authorities have regularly discovered illegal mining operations across the country, often located in public facilities such as schools and mosques that benefit from free or heavily-subsidized electricity.
In 2022, the Intelligence Ministry reported blocking over 9,000 accounts belonging to 454 individuals involved in illegal or undeclared currency and digital currency transactions. These trades amounted to approximately 600,000 billion rials, or around $2 billion, based on that period’s exchange rate.
Experts have criticized the Iranian government’s “muddled relationship” with cryptocurrencies. While digital currencies have been used to obscure various forms of trade and evade sanctions, they also present opportunities for illicit activities.
Reports suggest that large-scale cryptocurrency mining operations in Iran are being conducted by influential or well-connected networks, including some Chinese companies. These operations reportedly benefit from Iran’s subsidized electricity and may have been sanctioned by the country’s intelligence services and the Revolutionary Guard.
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