Between allowing and banning bitcoin mining, the Iranian government is hesitant to show a clear direction! Due to issues with Iran’s power grid, cryptocurrency mining activities were banned last May, before finally being reauthorized in the fall of 2021.
Iran and Bitcoin mining: between love and rupture
Before anything else, it is important to keep in mind that Iran is one of the first countries to have legalized Bitcoin mining, in September 2018. The legislator had effectively allowed cryptocurrency mining, but on the condition of obtaining a license and being charged on the basis of specific rates.
Iran, faced with the limitations of its power grid, has experienced numerous general power outages. Thus, in May 2021, former President Hassan Rouhani announced a general ban on cryptocurrency mining applicable, in principle, until the end of the summer. The implementation of this measure has not been simple. Over the course of the summer, several operations were carried out by the Iranian police against reluctant miners. The spokesman for the government agency in charge of electricity production and distribution in Iran (the Tavanir) said:
“The company hopes that energy consumption will decrease by the end of the summer, allowing for the resumption of activities of declared cryptocurrency miners.”
Tavanir spokesperson’s statement to ISNA
According to the Financial Tribune statement, Iran’s Ministry of Industry, Mines and Trade will lift the ban on Bitcoin and cryptocurrency mining as of September 22, 2021. This is a commendable step backwards, although the usefulness of the measure should be questioned. Indeed, according to the same statement, the consumption of authorized miners would be paltry compared to that of undeclared miners, which would be comparable to the daily consumption of a city the size of Tehran. Thus, it is unlikely that such a measure would be effective in the long run.
What’s next?
China’s ban on bitcoin mining is raising fears of more miners coming to Iran. Already facing widespread power outages, an increase in miners could be untenable.
Iran’s Bitcoin mining sees new twists and turns
These periods of mining bans in Iran are favorable for countries that have recently moved to legalize such activities, such as El Salvador. But they also represent opportunities for US miners who are investing more and more in order to get the lion’s share of the Bitcoin network.
In parallel to these measures, Iran indicates that the hunt for illegal miners will continue to prevent theft, and tampering with public power grids. According to Tavanir, more than 212,373 pieces of mining equipment have been seized in the last 12 months, with an estimated loss of 180,000 billion Iranian rials (about 3.5 billion euros).
It remains to be seen whether this practice of the “on/off” button for cryptocurrency mining activities tends to become more widespread in other countries. Indeed, Iran as a forerunner in the authorization of mining, may have unearthed a way to regulate these activities in line with their resources, without banning them. This system would be adapted to other countries, such as Spain, which is experiencing a resurgence of illegal bitcoin mining.
