- Iran imposed a four-month ban on crypto mining to ease the burden on the electric power grid.
- It has been announced that the ban will end on Sep. 22.
Months ago, large parts of the Iranian capital city Tehran, and Karaj in addition to other cities were affected by unannounced power cuts. This sparked protests across the country forcing the then President Hassan Rouhani to apologize and blame the situation on drought and high demand. In a cabinet meeting, Rouhani mentioned crypto mining as one of the major culprits, stating that mining facilities of which 85 percent are unlicensed consumes more than 2 Gigawatts (GW) from the grid per day. As part of the measures to address the crisis, the country issued a four month ban on energy-consuming cryptos like Bitcoin.
According to Rouhani, unlicensed crypto mining facilities consumed between six and seven times more power, and so the action could ease the electricity burden. The licensed crypto mining facilities voluntarily shut down their operations according to the national electricity company.
Iran’s power consumption topped 60,000 Megawatts (MW) per day in the summer, which is ten times the consumption recorded last year. This is a cause for concern as electricity generation has not changed with its known 50,000 to 56,000 MW. Because electricity remains cheap and subsidized in the country, people do not limit its use. This has attracted many crypto miners whose facility consumes up to 10 percent of the electricity supply in the country.
Iran to reallow crypto mining
In a recent development, Tavanir, an Iran power generation, distribution, and transmission company has confirmed that crypto mining facilities will resume operation on September 22. It is expected that the power consumption strain will subside by then. Research has disclosed that the energy consumed by licensed miners is just a fraction of the total energy consumed. This, however, cannot be said about unlicensed miners. It is reported that they consume between 2000 to 3000 MW per day. This is half of the daily consumption of the city of Tehran.
In 2019, Iran took a bold step to legalize crypto mining, and a couple of years later, 4.5 percent of all crypto-mining was done in the country. In June 2021, the country introduced a regulatory framework to regulate the crypto market.
This year has been very tough for miners as China took a similar step to shut down all crypto mining facilities. The decision has always been influenced by the adverse environmental effect of Bitcoin mining and its ability to consume more energy than some smaller countries. However, with the recent move towards staking consensus mechanism which conserves up to 99 percent energy, these concerns may soon be a thing of the past.
Despite the consumption concern, El Salvador has opened its arms to miners to take advantage of its volcanic geothermal energy. Many reports have also hinted that miners are moving from China to neighboring countries like Kazakhstan.
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