Iran is preparing to lift restrictions on cryptocurrency mining imposed following the electricity shortage this summer. Under Iranian media, the company responsible for supplying energy in the country said that the ban would be lifted as early as next month.
Crypto mining banned
Iran had recognized mining as a legal activity in July 2019. Miners were obliged to obtain a license from the Ministry and pay electricity bills at export prices. The department had issued permits to some 30 companies.
However, last May the Iranian ministry of industry and commerce introduced a temporary ban on cryptominage. According to former head of state Hassan Rohani, about 85% of miners operated on Iranian territory without proper license. Later authorities discovered and closed thousands of “mining farms” that were operating without permits, including those located in mosques that do not pay bills.
The ban on digital asset mining was adopted due to the peak season of overloading power grids. Several major cities have experienced blackouts caused by increasing electricity consumption and a drought that has reduced the capacity of hydropower plants.
The local cryptocommunity greeted the suspension of mining with frustration and criticism.
Solving the energy problem
According to the English-language newspaper Financial Tribune, the restriction will be lifted on September 22. The authorities hope that electricity consumption throughout the Islamic Republic will decrease by the end of the summer. This will create the conditions under which legal minors can return to work.
Iran accounts for 4.5% of global cryptocurrency production. Local miners consume about 600 MW annually. This allows Tehran to earn hundreds of millions of dollars with cryptocurrencies, which they could theoretically use to circumvent U.S. sanctions banning any monetary relationship with Iran.
In recent months, the demand for cryptocurrencies in Iran has increased. Residents are trying to preserve their savings against a backdrop of 46.9% annual inflation, the falling stock market and stagnant housing prices. According to the president, electricity consumption over the past year has increased by 20%, but he did not specify how much of the growth in demand is due to cryptomining.
Recall that in April, the Iranian central bank allowed banks and other licensed financial institutions to use cryptocurrencies to pay for imports. The state allocated representatives of this profession additional subsidies for electricity, demanding in exchange the sale of cryptocurrency to the central bank. Thanks to this measure the country has attracted many foreign companies.
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