Iran’s leadership has blamed energy-intensive bitcoin mining for current problems with electricity supply and massive smog in cities across the Islamic republic. Media report that the capital Tehran and other major cities in the country have experienced repeated power outages in recent weeks. At the same time, some of the smog has reached harmful levels, writes Bloomberg.
While other reasons have also been cited, officials have recently repeatedly pointed to illegal Bitcoin miners as being partly to blame as well. Cryptocurrency had recently reached new highs, making mining more attractive again. In the meantime, however, the value has fallen again.
Bitcoin as an alternative to the dollar
The Islamic Republic has for years been the target of increasingly draconian economic sanctions imposed by the United States following the announcement of the nuclear agreement. Exclusion from global trade relations is weighing on Iran’s economy, while at the same time subsidized electricity prices in the resource-rich country are lower than almost anywhere else in the world. For years, therefore, the country has been a popular location for cryptocurrency shurpers who specialize in energy-hungry bitcoin calculations. Previously, China had ordered a crackdown on the practice, driving many miners to other states.
Iran’s leadership had initially reacted inconsistently to this influx of crypto miners. Like other states that have been pushed out of global financial relations by the U.S., the Islamic Republic had also buried cryptocurrency as a possible alternative, Radio Free Europe explains. On the other hand, concerns about power supply are not new: in 2019, mining farms had been shut down to counter their high power consumption. Then, in July 2019, the Iranian government introduced a license for legal cryptomining and has been cracking down on unlicensed rogue miners ever since.
Such measures are probably being considered again now, but the country’s problems are more profound, Radio Free Europe reports. The country’s power grid is in a state of disrepair, and because of the overall increase in winter demand, power plant operators have already had to switch to lower-quality fuel, Bloomberg writes. Thus, they became contributors to the immense smog problem. Meanwhile, a cryptocurrency expert from Tehran ared the Washington Post that mining takes up only a very small percentage of the country’s electricity consumption. The poor state of the power grid, on the other hand, has been known for years, he said.