Mining Ban Sparks Negative Reaction from Iranian Crypto Community

Critics say curbs on cryptocurrency mining are driving Iran out of global mining industry

Cryptocurrency miners were forced to deal with more than one power outage last year, and the Iranian Electricity Generation, Transmission and Distribution Company (Tavanir) has told them to stop operations again until late this summer. High temperatures over the next three months will lead to power shortages and demand will surge due to increased cooling consumption, the company said.

According to company spokesman Mostafa Rajabi Mashhadi, the measure should help relieve the heavy load on the national grid during peak periods. According to a report by Iranian business news outlet Way2pay, stakeholders opposed the move, insisting it was unfounded and would damage Iran’s cryptocurrency mining industry, as it did in 2021.

Power shortages and frequent blackouts have been blamed in part for the increase in electricity usage for mining — both legal and illegal. Licensed miners were ordered to close last May. They were allowed to resume operations in September, but were then asked to unplug equipment to help alleviate power shortages during the cold winter, when demand for energy for heating increases.

The Cambridge Center for Alternative Finance's bitcoin mining map shows that the miners were hit hard by multiple shutdowns last year, with Iran's share of global bitcoin mining falling to 0.12%, effectively removing Iran from The global crypto mining industry was driven out. Now, similar incidents have once again sparked a backlash from the field and warnings that Iran has fallen behind its rivals.

Iranian miners have few other options

Some Iranians believe that removing cryptocurrency miners from the equation will have little impact on power supply, since legal mining facilities account for a relatively small share of network load. The report notes that it is unclear how effective a ban on licensed mining will ultimately be.

It is unclear why miners across the country should cease activity, as in reality some crypto farms operate in parts of the country where there are no electricity shortages. Another objection boils down to the question: why should only miners be disconnected from the grid? Why did this happen so suddenly?

Iran legalized cryptocurrency mining as an industrial activity in 2019. Since then, dozens of companies have applied for licenses from the Ministry of Industry. Mohammad Khodadadi, an executive responsible for the mining industry at Tavanir, reminded that the government resolution clearly stipulates that miners are not allowed to purchase electricity during peak electricity consumption. Their contract also contained similar clauses, he added.

According to Way2pay, cryptocurrency miners in Iran now have limited options as it is clear that the country’s power grid is no longer able to meet their needs. The first is to wait for the authorities to lift the ban. Another way is to use alternative fuels or rely on renewable energy to generate electricity by installing diesel generators. The last resort is to go underground and continue to illegally manufacture digital currency at your own risk.