In response to widespread electricity blackouts, Iran authorities have shut down 1,600 Bitcoin mining farms. The decision appears to contradict the country’s previous policies toward cryptocurrency mining.
The Islamic Republic previously authorized 24 Bitcoin processing centers that consume an estimated 300 megawatts of energy. Furthermore, Iran’s electricity cost of around 4 cents per kilowatt-hour, as well as the tax-free zones in the south, helped to attract tech-savvy Chinese entrepreneurs.
The Iranian government is said to be more concerned with how much money is sent abroad and controlling money laundering. Bitcoin has been used by business people and individuals across the country to bypass the United States’ banking sanctions that have crippled the economy.
While Iran’s electricity costs are more competitive relative to those of its peers, Bitcoin miners see things differently. Mohammad Reza Sharafi, the head of the country’s Cryptocurrency Farms Association. Suggested that Iran’s electricity costs are not viable and could be a discouraging investment.
Sharafi revealed that of the 1,000 investors given permits, only a couple dozen server farms are active. The rest of the miners seem to be put off by the fact that the power tariffs they face are five times more than those of steel mills and other industries that consume far more power.
In addition to Iran authorities shutting down 1,600 Bitcoin mining farms. They have also seized tens of thousands of Bitcoin mining machines they claim are illegally using subsidized electricity from state-run energy provider Tavanir.
Bitcoin Mining Equipment Confiscated
Upwards of 45,000 mostly application-specific integrated circuit (ASIC) machines were confiscated. The powerful machines had purportedly been consuming 95 megawatts per hour of electricity at a reduced rate.
Cryptocurrency researcher Ziya Sadr believes miners had “nothing to do with the blackouts,” claiming they only made up a “very small” percentage of overall electricity capacity in the country.
Meanwhile, former deputy head of Iran’s Department of Environment Kaveh Madani disputed the narrative that Bitcoin mining activities consume excessive power.
According to him, while Bitcoin is an easy victim, the real cause of the shortages seem to be the “decades of mismanagement, which led to the growing gap between Iran’s energy supply and demand.
Also hurting the Iranian government’s claim that Bitcoin mining consumes too much electricity is an estimate by its own telecommunications ministry. According to this ministry, Bitcoin’s share of Iran’s total energy production is just 2%.
In July of last year, Iran penned a registration directive forcing miners to disclose their identities. It also forced them to disclose the size of their mining farms and their mining equipment type to the Ministry of Industry, Mines and Trade.