By Cryptocurrency mining is the process via which various forms of cryptocurrency transactions are verified. The miners use a powerful setup that provides the required processing power and that needs huge amounts of electricity. With every passing day mining, cryptocurrencies like Bitcoin and Ethereum are becoming more difficult and energy consuming. Iran has seen a steep rise in the number of cryptocurrency miners. Many mining farms have been set up and that according to the Iranian government, has put some heavy load on the nations power system.
With the summer heat taking over and the chances of more power outages increase, authorities in Iran are blaming the Iranian mining industry of putting a huge load on the nation’s power grid. There were also reports of a recent spike in electricity consumption and demand for power rose by almost 7% in the month of June. With Cryptocurrency gaining popularity among Iranians, people are looking towards it as a means to store their wealth.
Iranian authorities are taking action
The Iranian government has recently seized two Bitcoin mining farms consisting of 1000 bitcoin farming machines, from two abandoned factories according to Reuters. The report does not state how long these farms have been abandoned or why, but authorities say these farms alone have been consuming one megawatt. This event followed recent media reports which stated that the officials were blaming cryptocurrency miners for the steady rise in power demand.
Blaming it on the miner?
Iran provides one of the cheapest electricity rates. Industrial-grade power costs about $0.01 per kilowatt-hour to as low as $0.006. A few days back, Mostafa Rajabi Mashhadi, a spokesman for Iran’s state-run power distribution company Tavanir, sent a “most urgent” letter to provincial power distribution companies asking them to identify mining farms and cut-off power to them until the nation has set-up proper regulations for the budding industry. While other officials suggest miners pay higher electricity rates, local crypto miners believe the government is using them as an easy target to blame for the country’s power problems.
“I always thought the government would be inclined to tax crypto mining, which would be natural, but now it seems the country is facing a long-standing electricity problem and crypto mining is an easy target,” Babak Nazari, a crypto miner told Al Jazeera, the news publication.
There have been no official reports that confirm cryptocurrency mining as the sole reason for the rise in power demand. Just last year a study was published by two Iranian energy experts which showed that mining one bitcoin consumes power equivalent to that required to produce 107 barrels of oil or 15,000 cubic meters of natural gas, but many other experts question that figure.
Governments need to regulate not Ban
Many members of the crypto mining community in Iran believes that charging a higher tariff to crypto miners is a reasonable factor rather than cutting the industry off completely.
“Crypto mining in Iran will only be viable if the electricity price does not exceed $0.02 per kilowatt-hour, but that is just one aspect of the situation,” Omid Alavi, a miner, told Al Jazeera.
According to the man, if electricity tariff plans are regulated for the mining industry that would help crypto miners operate better and will shape the industry in a better way.
“If importing crypto mining hardware is legalized with suitable tariffs, and electricity prices are set reasonably, not only can the mining industry exit its current underground status, becoming more transparent, it can boost the Iranian economy in multiple ways,” he said.
Alavi has advised many crypto mining groups previously and he says that many international miners have expressed their interest to move their operations to Iran due to cheaper electricity cost. He believes this could boost the nation’s economy significantly if the industry is legalized and properly taxed.
As of the future of cryptocurrencies in Iran is uncertain and bitcoin on the road to touching new highs, this opportunity might soon be lost.
Comments