The government of Iran has opted to introduce specific electricity prices for cryptocurrency mining. The west Asian country, which has had a complicated relationship with cryptocurrency in the past, plans to set prices around the same tariffs that are used for exporting electricity.
The government’s energy ministry deputy for power and electricity, Homayoon Ha’eri, announced the decision Sunday in remarks reported by Financial Tribune. The economic commission is now awaiting final approval from the wider cabinet. Although Ha’eri did not reveal the prices or rates, he did note that energy export prices can shift based on factors like fuel prices in the Persian Gulf region.
The move is a step toward greater legitimacy for cryptocurrency operations in Iran. The country has attracted miners with cheap electricity prices, but officials have warned about the strain on the national grid. With its own electricity tariff, cryptocurrency mining has been recognized by authorities.
Iran has become a popular destination for cryptocurrency miners in recent months. Attracted to cheap electricity, miners have been moving operations from China to Iran. It comes as the Chinese government places restrictions on cryptocurrency mining.
Iran gives big subsidies to electricity. In 2017, Iran spent around 10.4 percent of gross domestic product on subsidizing electricity. A study by Elite Fixtures found it costs $3,217 to mine one bitcoin in Iran, versus $3,172 in China and $4,758 in the United States.
Mohammed Sharqi, Managing Director of the Iran Blockchain Association, said in an interview earlier this month:
The Chinese have made requests through official channels for cryptocurrency mining in free zones.
One spokesperson from the energy industry claimed that Iran hosts over 148,000 mining machines.
Crypto miners are showing interest in Iran, and decentralized currency could help locals where global banking systems have failed the country. The government has expressed a mixed opinion on cryptocurrency, however. This is in part due to a seven percent surge in power usage last month. The surge was linked to bitcoin mining.
Last month, the authorities seized 1,000 bitcoin mining rigs in the Yazd province. The rigs, found in two abandoned factories, were using around one megawatt. The government’s energy ministry has accused bitcoin mining of making the energy grid unstable.
The government has also, however, accused the United States of trying to block bitcoin mining in the country. The issues come after the United States lobbied to remove Iran from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network last November.
Iran also announced a gold-backed stablecoin earlier this year, known as Peyman, that includes the involvement of four banks.
While bitcoin mining has been accused of causing energy problems for the country, it seems cryptocurrency potentially offers a number of big benefits. Now that mining is set to receive its own tariff, it could help alleviate some of the concerns around miners taking advantage of rates intended for the general population.
Last modified (UTC): July 22, 2019 09:03