Given the ongoing power outages in Iran, the country’s authorities have responded to the crisis with targeted Bitcoin mining operations. A total of 1,600 mining centers were closed in the sanctioned country’s campaign against miners. However, this Iranian lightning bolt on cryptocurrency miners appears to contradict the country’s previous policies regarding cryptocurrency mining.
The real cost of electricity in Iran
According to a reportThe Islamic Republic previously approved “24 bitcoin processing centers, consuming an estimated 300 megawatts of energy per day.” In addition, “Iran’s electricity costs of around 4 cents per kilowatt hour” and the tax-free zones in the south have helped to attract “tech-savvy Chinese entrepreneurs”.
However, the report states that other elements within the Iranian government are more concerned with “how much money is sent abroad and how money laundering is controlled”. Across the country, Bitcoin is used by business people and individuals to bypass the US “banking sanctions” that have crippled the economy.
Although Iran’s electricity costs are more competitive compared to those of its peers, the report suggests that the country’s bitcoin miners take a different view. As Mohammad Reza Sharafi, the head of the country’s Cryptocurrency Farms Association, suggests, Iran’s electricity costs are unsustainable. He suggests that they might actually “discourage investment”
The report quotes Sharafi as saying:
Activities in the field (Bitcoin mining) are not possible due to electricity tariffs.
Sharafi explains this claim that Iranian electricity tariffs are high, that “only a few dozen server farms are active” from permits granted to 1000 investors. The rest of the miners seem put off by the fact that the electricity tariffs they face are five times higher than those of “steel mills and other industries that use far more electricity”.
Decades of mismanagement
Meanwhile, comments from Kaveh Madani, the former deputy head of Iran’s Ministry of Environment, were also published in the same report. Madani is cited to deny the narrative that Bitcoin mining activities are using excessive power. While “Bitcoin is an easy victim”, the real cause of the shortage appears to be the “decades of mismanagement” that led to the “growing gap between Iranian energy supply and demand”.
Also undermining the Iranian government’s claim that Bitcoin uses too much electricity is an estimate by its own telecommunications ministry. According to this ministry, Bitcoin’s share of total Iranian energy production is only 2%.
Do you agree that bitcoin mining in Iran is the cause of power shortages? Let us know what you think in the comments section below.
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