Iran Introduces Incentives for Reporting Unauthorized Cryptocurrency Mining During Energy Crises

Iran is implementing strategies to address unauthorized cryptocurrency mining as the country faces power shortages intensified by an extreme heatwave.

The government is providing financial rewards to individuals who report illegal crypto-mining activities, offering up to 1 million toman (around $24) for each tip, as stated in a report from Iran International.

The intense heat, with temperatures soaring to 113 degrees Fahrenheit (45 degrees Celsius), has placed significant strain on Iran’s electrical grid.

The heat in the southern cities of #Iran has surpassed 45 degrees Celsius. Birds have sought shelter from the heat by bathing in the waters of the Persian Gulf. pic.twitter.com/KYZHqF6ygD

— ParsToday English (@ParsTodayEN) August 14, 2024

Illegal Crypto Miners Increase Strain on Power Grid

Mostafa Rajabi Mashhadi, CEO of the state-owned electricity company Tavanir, indicated that the situation is aggravated by illegal crypto-mining activities that take advantage of subsidized electricity and public networks without the necessary permissions.

“Unauthorized cryptocurrency mining has resulted in a notable increase in electricity usage, leading to significant disruptions in the nation’s power grid,” Mashhadi stated.

He disclosed that authorities have identified 230,000 illegal crypto-mining rigs, which together consumed as much as 900 megawatts of electricity.

This consumption level is akin to that of an entire Iranian province with a population of 1.4 million.

Illegal crypto-mining has emerged as a widespread concern in Iran, with numerous operations reportedly occurring in schools and mosques, where electricity is either free or heavily subsidized.

Iranian officials regularly announce the detection of such activities as they work to safeguard the country’s power infrastructure.

Cryptocurrency mining is an energy-intensive process that requires specialized computing power to solve intricate cryptographic puzzles, with rewards typically distributed in Bitcoin, the leading proof-of-work blockchain.

However, the recent Bitcoin halving in April, which reduced mining rewards by 50%, has left many miners struggling to maintain profitability.

Some, especially in the United States, have even shifted to artificial intelligence projects to sustain their operations.

It is important to note that Venezuela has also prohibited crypto mining, citing the need to protect the nation’s power grid due to its excessive energy consumption.

Iran’s Share of Crypto Mining Continues to Decline

The Iranian government officially acknowledged cryptocurrency mining as a legitimate business activity in 2019 and issued over 1,000 crypto mining licenses to attract investment into the heavily sanctioned nation.

Miners are obligated to pay taxes on their electricity usage and sell their mined cryptocurrency to Iran’s central bank.

The country has become one of the largest Bitcoin mining centers, utilizing its subsidized electricity to facilitate the energy-demanding process.

However, it is noteworthy that Iran’s global share of Bitcoin mining has decreased as recent power shortages have led the government to suspend mining operations.

According to the Cambridge Centre for Alternative Finance (CCAF), Iran’s Bitcoin mining currently represents 0.2% of the total Bitcoin hash rate, down from a peak of 7% in 2021.

Simultaneously, the rising occurrences of illegal bitcoin mining in Iran have attracted regulatory attention.

Iranian authorities confiscated 7,000 mining computers at an illegal cryptocurrency farm in June 2021, as reported by Reuters.

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