Iran has banned the energy-intensive mining of cryptocurrencies such as Bitcoin for nearly 4 months, President Hassan Rouhani said on Wednesday, as the country faces major power blackouts in many cities.
“The ban on the mining of cryptocurrencies is effective immediately until September 22 … Some 85 percent of the current mining in Iran is unlicensed,” Rouhani said in a televised speech at a cabinet meeting.
Bitcoin (price in India) and other cryptocurrencies are created through a process known as mining, where powerful computers compete with each other to solve complex mathematical problems. The process is highly energy intensive, often relying on electricity generated by fossil fuels, which Iran is rich in.
As next month’s presidential election approaches, the blackouts have been widely criticised by Iranians. The government has blamed the power cuts on cryptocurrency mining, drought, and surging electricity demand in summer.
According to blockchain analytics firm Elliptic, around 4.5 percent of all Bitcoin mining takes place in Iran, allowing it to earn hundreds of millions of dollars from cryptocurrencies that can be used to lessen the impact of US sanctions.
Iran’s economy has been hit hard since 2018, when former President Donald Trump exited Tehran’s 2015 nuclear deal with six powers and reimposed sanctions.
US President Joe Biden’s administration and other global powers have been in talks with Iran to revive the deal.
Iran has accepted crypto mining in recent years, offering cheap power and requiring miners to sell their bitcoins to the central bank. Tehran allows cryptocurrencies mined in Iran to be used to pay for imports of authorised goods.
The prospect of cheap power has attracted miners, particularly from China, to Iran. Generating the electricity they use requires the equivalent of around 10 million barrels of crude oil a year, or 4 percent of total Iranian oil exports in 2020, according to Elliptic.
© Thomson Reuters 2021