Bitcoin Mining : What Is Iran Up To
September 2, 2021 7:12 AM
Between authorizing and banning bitcoin mining, the Iranian government is reluctant to show a clear direction! Due to issues related to Iran's electricity grid, cryptocurrency mining activities were banned last May, before finally being re-authorized by the fall of 2021.
Iran and Bitcoin mining: between love and rupture
First of all, it must be remembered that Iran is one of the first countries to have legalized Bitcoin mining, in September 2018. The legislator had indeed allowed cryptocurrency to be mined, but on the condition of obtaining authorization and to be billed on the basis of specific tariffs.
Iran, faced with the limits of its electricity grid, has suffered many general blackouts. Thus, in May 2021, former President Hassan Rouhani announced the general ban on cryptocurrency mining applicable, in principle, until the end of the summer. The application of this measure was not easy. During the summer, several operations were carried out by the Iranian police against the reluctant minors. The spokesperson for the government agency responsible for the production and distribution of electricity in Iran (Tavanir) said:
“The company hopes that energy consumption will decrease by the end of the summer, allowing the business of reported cryptocurrency miners to resume. "
Statement by Tavanir's spokesperson to ISNA
According to the statement from the Financial Tribune, the Iranian Ministry of Industry, Mines and Trade will lift the ban on mining Bitcoin and cryptocurrencies from September 22, 2021. This reversal is commendable, although it should be noted that questioning the usefulness of the measure. Indeed, according to the same press release, the consumption of authorized minors would be derisory compared to that of undeclared minors, which would be comparable to the daily consumption of a city the size of Tehran. Thus, it is unlikely that such a measure will be effective in the long term.
And after ?
The ban on bitcoin mining in China raises fears of the arrival of new miners in Iran. Already faced with general power cuts, an increase in the number of miners could be untenable.
These periods of mining bans in Iran are favorable to countries that have recently taken the party to legalize these activities, such as El Salvador. But they also represent opportunities for US miners who invest more and more, in order to claim the lion's share within the Bitcoin network.
In parallel with these measures, Iran indicates that the hunt for illegal minors will continue to prevent thefts and alterations of public electricity networks. According to Tavanir, more than 212,373 mining equipment have been seized over the past 12 months, for damage estimated at 180,000 billion Iranian rials (approximately 3.5 billion euros).
It remains to be seen whether this practice of the “on / off” button of cryptocurrency mining activities tends to become widespread in other countries. Indeed, Iran, as a forerunner in the authorization of mining, may have found a way to regulate these activities in line with their resources, without banning them. This system would thus be adapted to other countries, such as Spain, which is experiencing an upsurge in illegal bitcoin mining.