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Iran Accuses US of Looking to Thwart Its Bitcoin Mining Operations

Last Updated March 4, 2021 2:37 PM
Jose Antonio Lanz
Last Updated March 4, 2021 2:37 PM

Iran’s Assistant Minister of Industry, Trade and Supply, Saeed Zarandi, said that Trump’s administration is working to block bitcoin mining in the country, according to local news outlet Fars.

After lobbying to get the country out of the SWIFT system, the U.S. now seems to have its eyes set on the recent interest of Iranian citizens in crypto-mining as a productive activity capable of evading the financial sanctions imposed against their country. The U.S. is making it difficult for Iran to get its economy off the ground.

Iran is a Paradise for Crypto Miners, but Miners Are a Nightmare For Iran

Iran is one of the countries with the cheapest electricity in the world. Statistics from Global Petrol Prices  reveal that while 1kWh costs on average $0.14 in the U.S., Iranians pay about $0.03 thanks to a government subsidy.

Low energy costs make mining extremely profitable. In the latest months, the activity has grown so much that the country’s infrastructure is suffering the consequences of a growth in consumption higher than the power generation capacity. Speaking to Mehr , Ali Akbar Karimi, a member of Iranian Parliament’s Economic Committee, shared his concerns while urging the government to redouble its efforts to regulate this activity:

“Mining cryptocurrencies has become a common and widespread activity in Iran, and it consumes considerable power which has caused problems for the country, especially in the hot season.”

This problem has led Iranian officials to combat mining with measures such as power cut-offs and direct confiscation of mining equipment

Is All of This Part of a Major Agenda?

If Mr. Zarandi’s suspicions are correct, Iran may be just a piece in the geopolitical and commercial chess game the United States and China are playing right now.

China’s government has not shown official interest in promoting BTC mining. The Chinese private sector, however, migrated to Iran to take advantage of its low energy costs and enjoy better benefits from crypto mining, according to Iran’s Minister for Communications and Information Technology, Mohammad Javad Azari Jahromi, on PressTV .

“A major part of cryptocurrency mining used to be done in China before Iran became attractive for miners …The Chinese government has no plan to be present in the field of cryptocurrency mining in Iran; however, China’s private sector and people may have been involved in this area.”

To this possible boycott, we must add other actions that have strongly harmed the cryptocurrency community in Iran. A little over a month ago, Localbitcoins announced that it would not allow Iranians to use its platform; likewise, at year-end 2018, Binance and other exchanges also withdrew support for the Iranian citizens, complying with the unilateral sanctions  imposed by the U.S. government.

Iranians Want to Move Forward

Despite the setbacks, the Iranian government is optimistic and confident that cryptocurrencies can help provide a better future for its citizens. Earlier this year, the government announced the launch of a gold-backed stablecoin and it seems that its citizens also share this interest. Several enthusiasts have shared a variety of projects to promote the ecosystem, with proposals as impressive as that of a skyscraper  in the middle of the desert hiding a mining farm cooled by a waterpark.

Concept image of a mining farm inside of a waterpark on Tehran, Iran
Concept image of a mining farm/waterpark/skyscraper | Source: Designboom

Currently, several ministries are working together with the Central Bank of Iran to regulate the local crypto ecosystem, attacking different angles such as mining, transactions, and economic obligations.