Iran has prohibited all cryptocurrency mining for the next four months, citing severe power disruptions as a source of popular discontent.
President Hassan Rouhani said on Wednesday that all crypto mining enterprises in Iran, even legal ones, must cease operations until September 22, the end of the sixth Iranian calendar month.
“Now everybody has a few miners laying around and are producing Bitcoins,” he told a televised cabinet meeting with a chuckle.
Crypto mining is the process of verifying transactions in exchange for new tokens using banks of powerful energy-hungry computers known as “rigs.” It is possible to make a lot of money doing this. However, the impact on electricity infrastructures and the carbon footprint of Bitcoin mining, in particular, has sparked intense opposition in Iran and other nations.
Tesla CEO Elon Musk, one of crypto’s most powerful promoters, prompted a drop in Bitcoin and other token values earlier this month when he announced that the electric vehicle company would no longer accept Bitcoin as payment. Climate concerns were cited as the cause for his U-turn.
Legal crypto mining businesses in Iran, according to Rouhani, require roughly 300MW of power, which is small. Illegal enterprises, on the other hand, use up to 2,000MW.
Officials claim that thousands of illicit mining equipment have been seized in recent years. The government has lately requested that its intelligence ministry tighten down on illegal miners, and a reward of 200 million rials ($900) is being offered for whistle-blowers who assist uncover unlawful activities.
Many Iranians have been upset by periodic power disruptions in provinces around the country, particularly in Tehran, the capital. Unannounced power outages can occur multiple times a day, and social media is flooded with photographs of how they have impacted surgical rooms, companies, and residences.
According to the president, the major cause of the outages, which have grown common in Iran over the summer but began even earlier this year, is exceptionally low rainfall, which has harmed hydroelectricity output.
Many analysts, however, believe that the country’s aging and under-resourced energy system is to blame.
Iran’s electrical infrastructure, according to First Vice President Eshaq Jahangiri, is in desperate need of investment, and the private sector must be permitted to assist the cash-strapped government with funds.
The claim that Bitcoin mining is the primary cause of power outages has been debunked for a long time.
Last week, Mojtaba Tavangar, the chair of the Iranian parliament’s digital economy panel, stated that parliamentarians’ investigations revealed that cryptocurrency mining consumes around 1% of the country’s overall electricity production.
“The reason behind the power outages is not cryptocurrency mining, it’s stopping funding and the old distribution and generation network,” he said.
Nonetheless, over the past many years, bitcoin mining facilities have been shut down during the summer to relieve the burden on the grid.
According to a recent estimate by analytics firm Elliptic, Iran accounts for around 4.5 percent of all worldwide Bitcoin mining, generating up to $1 billion in revenue that may be used to mitigate the effects of punishing US sanctions.
While crypto mining is recognized as an industry in Iran, with set power pricing, the entire crypto ecosystem, which has drawn millions of new investors in the last year, is governed by no clear laws.
The lack of regulation has resulted in a lack of transparency. However, experts claim that excessive stock market volatility and persistently high inflation rates have led to a huge number of Iranians investing their money in cryptocurrencies as a hedge against decreasing buying power.
However, poor crypto literacy has provided fertile ground for fraudsters, and cryptocurrency’s famed volatility has seen many investors lose their shirts when bets go against them.
Iranian authorities recently detained Sina Estavi, an Iranian crypto executive who headed both a crypto exchange and a blockchain-based enterprise, for “economic disruption.”
Many people who had money and crypto tokens in Estavi’s exchange and project lost their money when he was imprisoned, and have been seeking to reclaim it through Iran’s cyber police.
Estavi had built himself a reputation online even as unofficial charges against him had been growing for some time. He had, for example, bought a non-fungible token (NFT) of Twitter CEO Jack Dorsey’s first tweet for $2.9 million.