Deng Tong, Jinse Finance
March 3, 2026, the Middle East conflict has raged for four days and continues to escalate.
On March 2, Trump made a strong statement: the US military is "striking hard" at Iran, but the "big wave" has not yet arrived. "The situation in Iran is about to become even more insecure. We hope everyone stays at home. We haven't even started attacking them yet. The real big wave hasn't arrived yet, but it's coming soon."
On March 3, a senior US official pointed out that the US is preparing to launch a "major escalation" attack on Iran within the next 24 hours. The official stated that the US assessment believes the first round of attacks has achieved its goal of weakening Iran's defenses, and the next phase will focus on destroying Iran's missile production, drone, and naval capabilities.
On the same day, the Public Relations Department of the Iranian Islamic Revolutionary Guard Corps announced that its naval drone force launched the 13th round of attacks under Operation Real Commitment-4 against the US military base "Arifjan" in Kuwait.
I. Increasing Poverty and a Depreciating Rial According to official Iranian data, the average price of basic necessities in Iran has risen by 60% in the past 12 months, with food prices doubling during the same period. The cost of a family food basket is now eight times that of five years ago and more than 30 times that of 2016. As food prices soar, red meat has disappeared from Iranian tables, replaced by cheaper options such as chicken, cheese, or beans. Data from the Central Bank of Iran shows that the annual consumption of beef and mutton per household has decreased from 64 kg in 2004/05 to 32 kg in 2024/25. An analysis of official data by the BBC shows that over the past 20 years, average annual household spending, measured in real purchasing power, has decreased by a quarter in urban areas and almost halved in rural areas. In other words, Iranians are, on average, poorer than they were 20 years ago. One of the main reasons for the soaring cost of living is the rapid depreciation of the rial. Since Trump announced the US withdrawal from the Iran nuclear deal and the reimposition of broad sanctions in May 2018, the Iranian rial has depreciated dramatically against the US dollar in the open market. As the situation in the Middle East continues to escalate, the Iranian rial has experienced another collapse, hitting a record low, pushing the already fragile Iranian economy further into crisis. Currently, the Iranian rial's free market exchange rate against the US dollar has fallen to approximately 1.315 million rials to the US dollar. Compared to the rate of approximately 42,000 rials to the US dollar in early December 2025, the current exchange rate represents a depreciation of over 30 times in just three months, a depreciation rate exceeding 3000%, resulting in the near-instantaneous evaporation of wealth for the Iranian people. Not only is the national currency severely impacted by geopolitical risks, but crypto assets are also experiencing significant outflows.
II. Significant Crypto Asset Outflow from Iranian Exchange Nobitex
According to Elliptic analysis, following the initial US-Israeli attacks on Iran, the outflow of crypto assets from Nobitex, Iran's largest cryptocurrency exchange, surged immediately. Within minutes of the first airstrikes, cryptocurrency outflows from Nobitex surged by over 700%, reaching over $500,000; later that day, the outflow approached $3 million within an hour.
The surge in cryptocurrency outflows last Saturday may represent capital flight from Iran. Nobitex allows users to exchange rials for crypto assets and then withdraw them to any external wallet. This allows funds to be transferred out of Iran while circumventing some scrutiny from the global banking system.
However, another cryptocurrency forensics platform, TRM Labs, attributes this to the strict internet censorship imposed by the Iranian regime.
According to TRM, shortly after the outbreak of the conflict, internet connectivity in Iran dropped by approximately 99%.
TRM also opposes Elliptic's conclusion that capital is fleeing Iran, stating, "The country's cryptocurrency ecosystem does not appear to show signs of accelerated growth or capital flight; instead, trading volume and value have declined as the regime has implemented strict internet censorship."
The two explanations are not entirely contradictory. In the short term, panic selling due to the potential for war, followed by the internet censorship leading to an overall decline in trading volume.
III. Iranian Authorities and Cryptocurrencies
The amount of cryptocurrency used in Iran is steadily increasing.
In recent years, cryptocurrency activities related to Iran have reached billions of dollars annually, encompassing retail users and, according to officials, sanctioned entities. US authorities are investigating whether digital asset platforms help state-linked actors transfer funds and acquire hard currency outside the traditional banking system.
Cryptocurrencies have become an important financial alternative for many Iranians, and the Islamic Revolutionary Guard Corps (IRGC) also extensively utilizes digital assets to fund its operations.
In 2025, Iran's cryptocurrency ecosystem exceeded $7.78 billion, with a significantly faster growth rate than the previous year.
According to Chainalysis data, cryptocurrency activity in Iran shows significant peaks during major domestic and geopolitical events.
In January 2024, the Kerman bombing killed nearly 100 people, coinciding with the memorial service for Qassem Soleimani, former commander of the Quds Force of the Islamic Revolutionary Guard Corps (IRGC-QF).
In October 2024, Iran launched missile attacks on Israel, following the assassination of Hamas leader Ismail Haniyeh in Tehran and Hezbollah Secretary-General Hassan Nasrallah in Beirut.
In June 2025, Iran and Israel engaged in a 12-day war, during which the number of cyberattacks, though small, increased significantly. This war marked the culmination of the covert war between Iran and Israel.
In June 2025, Iran and Israel engaged in a 12-day war, during which, although the number of cyberattacks was small, increased significantly. This war marked the climax of the covert war between Iran and Israel.
This conflict not only led to a joint US-Israeli strike against Iran's nuclear weapons and ballistic missile programs, but also triggered cyberattacks against Nobitex, Iran's largest cryptocurrency exchange, and Bank Sepah, Iran's oldest bank, heavily used by the Islamic Revolutionary Guard Corps (IRGC). Hackers also infiltrated Iranian state television, broadcasting footage of women's protests and inciting Iranians to take to the streets. Due to sanctions imposed by the US, EU, and UK, buyers paying Iran through traditional financial methods risk being excluded from the Western financial system. Therefore, Iran has opted for cryptocurrency payments. In early January of this year, the Financial Times reported that Iran was selling advanced weapons systems, including ballistic missiles, drones, and warships, to foreign governments, requiring payment in cryptocurrency in an attempt to circumvent Western financial regulations. The Financial Times, after analyzing Iranian propaganda documents and payment terms, pointed out that the Iranian official agency, the Defense Export Center (Mindex), was ready to negotiate military contracts. Iran allowed buyers to pay in cryptocurrency, while also accepting barter and Iranian rials. Iran had already made these offers last year. Furthermore, as a country where cryptocurrency mining is legal, Iran's mining industry has attracted considerable attention. In July 2019, Iranian authorities approved parts of relevant administrative laws authorizing cryptocurrency mining, clarifying the compliance of legal mining, and initiating a pilot program for cryptocurrency legalization. Iran allows licensed operators to use subsidized electricity on the condition that they sell the mined Bitcoin to the central bank. In practice, mining converts cheap domestic energy into assets that can be traded across borders. Licensed miners mint new Bitcoins and then sell them to the Central Bank of Iran. The bank can then transfer the Bitcoins to overseas counterparties for payments on machinery, fuel, or consumer goods, without going through US-controlled banks. In recent years, Iran's share of global Bitcoin mining hashrate has ranged between 2% and 5%. Iran attracts overseas mining companies with its extremely low electricity prices (as low as $0.006 per kilowatt-hour). However, a critical problem exists: miners rely heavily on imported machinery. Local instability and armed intervention on the border have significantly hampered the progress of mining companies. If the Middle East conflict continues to damage Iran's infrastructure, its mining capacity will decline, further squeezing the Iranian government's economic resources. IV. Can Cryptocurrencies Save Iran? As mentioned above, cryptocurrencies provide some economic support to the Iranian government. But can cryptocurrencies truly save Iran? Elliptic discovered that the Central Bank of Iran holds at least $507 million in USDT, which could help stabilize the rial and facilitate trade finance. While stablecoins offer a new way to circumvent traditional regulations, public blockchains allow investigators to track fund flows, identify counterparties, and flag sanctioned activities. In 2025, several wallets linked to the Central Bank of Iran were blacklisted, and approximately $37 million in USDT was frozen. This demonstrates that US sanctions are not limited to traditional finance; even crypto-finance is not immune. Therefore, while crypto assets can help Iranian authorities obtain funds to some extent, they cannot truly circumvent financial regulations and sanctions. Furthermore, as mentioned above, further damage to Iran's power infrastructure would block its access to cheap energy mining. Moreover, mining is merely an arbitrage method of converting cheap energy into on-chain assets; it is not a high-value-added industry. Even if it can provide Iran with some foreign exchange, it cannot provide financial support to a country. Therefore, cryptocurrencies can at best slightly alleviate Iran's funding shortage, but cannot reverse the trend of economic collapse. Whether the current geopolitical situation can calm down, whether US sanctions can be eased, and whether Iran can rebuild its domestic economy after resuming production are the key factors that will truly determine the future of Iran's economy.
Anais
