Iran’s economic problems forced the government to look for alternative ways. Although it does not recognize cryptocurrency as legal tender, it appears to be particularly enjoying the possibilities offered by Bitcoin transactions.
The United States imposes an almost complete economic blockade on Iran imposed, which includes a ban on all imports and exports – including those from the country’s oil, banking and shipping sectors. Given its pariah status, Iran wants to switch to blockchain to keep some businesses open.
The government expects bitcoin and cryptocurrency mining to become one important industry will be in the country. Public acceptance of cryptocurrencies could expand significantly as Iran’s tax authority recently called for a legal framework for digital currency trading activities. To do this, the country not only legalized cryptocurrency mining, but also pledged to give a portion of its oil and gas resources to miners who would invest in the country.
New industry under strict control
Iran started in 2019 Legalization of Bitcoin mining It has issued more than 1,000 licenses as of January 2020. The government seems keen to localize the crypto mining sector and allow it as a business. Parliament is even considering a bill that would ban the use of “foreign-mined” cryptocurrencies for domestic payments.
Iranian Students News Agency mentionedThat the government directs bitcoins mined in the country to private accounts. This money will be used to finance imports and other sanctioned activities, according to the report. The news agency relies on authorization from the Central Bank of Iran and the Ministry of Energy. As a result, both jurisdictions require legally registered miners to sell newly mined bitcoins to central banks. The move is reminiscent of the initiatives of countries like Venezuela, which are under sanctions and have also turned to cryptocurrency as an evasion tactic.
Converting oil into cryptocurrency
Iran has a favourBitcoin mining is an attractive opportunity for its sanctions-hit economy. It is short of foreign exchange but has a surplus of oil and natural gas. In this way, the country uses its wealth in mineral resources to generate electric power. This allows Iran to convert its largest resources into useful capital, to offset some of the lost revenue due to US and European Union economic sanctions.
Bitcoin and other cryptocurrency networks are built and powered by electricity. Bitcoin miners operate specialized computers that process and add new transactions to the blockchain. In return, miners are rewarded with Bitcoin (BTC) – through transaction fees and the minting of new Bitcoins. The mining process converts energy into digital currency. The license ensures that miners will continue to enjoy relatively cheap Iranian electricity. According to the news agency “more” They pay $0.11 per kWh, with rates going up to $0.46 per kWh during peak season (June through September).
Approximately 5% of all newly mined bitcoins come from Iran
According to the blockchain analysis firm Elliptical Between January and April of this year, about 4.5% of all Bitcoin worldwide was created in Iran. This puts the country in the top ten in the world, while China is ahead of government campaign It came first with almost 70%.
The prospect of cheap electricity for bitcoin mining has attracted significant investment from abroad, particularly from China. Many Chinese companies have obtained mining licenses and settled in the country.
Illegal mining activities threaten the power grid
Iran’s capital, Tehran, and many other major cities have been there several times a day in recent months Blackouts to fight. Authorities have blamed a natural gas shortage, an ongoing drought that has crippled the country’s hydroelectric power plants — and, increasingly, bitcoin mining. It appears that a large portion of the energy consumption came from illegal miners.
This has led to a nationwide crackdown on them. Licensed bitcoin farms have also been affected by temporary power outages. As the country heats up, power consumption has been so high in recent weeks that some medical facilities have struggled to run their cold storage facilities for Covid-19 vaccines. Once the moratorium is lifted in September, only authorized miners will be allowed to resume operations.
Iranian government claimedThat 85% of bitcoin mining in the country was illegal. According to its own data, energy supplier Tavanir has seized more than 212,000 units from illegal Bitcoin miners in the past 12 months. The machines are said to have caused an estimated $4 billion in losses to the power grid. It is worth noting that illegal miners use approximately 2,000 to 3,000 megawatts per day, which is about half of the daily electricity consumption of the city of Tehran.
Iranian officials are determined to solve the problems of illegal cryptocurrency mining. To this end, the Ministry of Intelligence resorted to an unprecedented step – recruiting spies. Their mission: to find and seize unauthorized digital assets in computer farms. The Ministry promised an attractive reward for anyone who discovers such farms.