Iran Will Cut Power to Licensed Cryptocurrency Miners

Iran Will Cut Power to Licensed Cryptocurrency Miners
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Iran’s relationship with the crypto mining business is a love-hate one. The government is again prohibiting crypto mining activities as it seeks to alleviate the burden on the country’s power supply, despite recognizing the potential of crypto as a tool to dodge international sanctions.

Electricity to all 118 government-authorized mining businesses in Iran would be turned off from June 22 ahead of seasonal increases in power consumption, Mostafa Rajabi Mashhadi, spokesman for Iran’s electricity sector stated in an interview with state TV, citing a Bloomberg article.

Bitcoin has long been explored and utilized as a tool for governments to avoid trade embargoes. Iran is under comprehensive sanctions by the US that effectively bans it from accessing the international banking system.

In 2019, Iran officially acknowledged the crypto mining business and began providing licenses to miners, which are compelled to pay higher power prices and sell their generated bitcoins to Iran’s central bank.

But the nation has also regularly blocked operations of crypto mining facilities. The government ordered two shutdowns to ease pressure on its power system last year, during which electricity consumption set a record high.

Crypto mining was thriving in Iran before the sanctions. Blockchain analytics firm Elliptic estimated in May last year that 4.5% of all Bitcoin mining took occurred in the nation. That ratio went dropped to 0.12% as of January, according to the Cambridge Centre for Alternative Finance (CCAF).

Miners in various nations have displayed resistance against regulators. The crypto hash rate, which measures the processing power utilized by proof-of-work cryptocurrencies like Bitcoin, in China plunged to zero between last July and August as the nation carried out the heaviest crackdown on crypto mining.

But the sector seems to have returned fast. In September, China accounted for 30% of the world’s crypto hash rate and in January, that ratio was at over 40%, second only to that of the US, according to CCAF.

The upswing suggested that underground mining would have been well started in China, where crypto trading is also forbidden. “Access to off-grid energy and geographically distributed, small-scale operations are among the key strategies utilized by underground miners to disguise their activities from authorities and avoid the ban,” stated CCAF in an analysis.

The quick dip and resurrection of China’s hash rate further revealed that its miners could have been surreptitiously functioning soon after the ban by rerouting their data via proxy services, CCAF stated. As time passed and the restriction set in, they could have grown less concerned about masking their places.

News Source: https://techcrunch.com/2022/06/19/iran-to-cut-electricity-to-authorized-crypto-miners-report/

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