Iranian Cryptocurrency Miners Need to Pay Real Electricity Prices

EghtesadOnline: Electricity bills for cryptocurrency miners should be calculated in real prices, a deputy energy minister said in Tehran at the weekend.

News ID: ۷۴۷۵۲۷

11 June 2019

Homayoun Haeri said crypto miners should pay their power bills as per the same rates considered for electricity export, IRNA reported.

According to media reports, the government annually pays close to $1 billion in subsidies to plug the huge gap in real energy costs and the bills sent to consumers.

Experts say consumers pay a fraction of the real cost and are oblivious to prudent energy use and unending government appeals for reducing consumption and waste, according to Financial Tribune.

Despite the prohibitions on trading and mining cryptocurrencies in Iran, the relatively low electricity costs and tanking of the rial due to the US sanctions has made the temptation for mining and trading cryptocurrencies all the more higher.

The Central Bank of Iran officially prohibited all financial institutions from dealing in cryptocurrencies in April 2018. The stated reason was mounting concern about money laundering and lack of transparency.

Vice president of Iran Electrical Industry Syndicate, Payam Bagheri, says mining cryptocurrency using cheap electricity is a visible example of wasting national resources.

Proper Regulation

Bagheri opposed force and coercion against such businesses and said the miners should be identified and organized in a way that enables the government to charge their electricity use as per real prices.

“Due to lower electricity tariffs for those in the agriculture business, miners have turned to using power in this sector. Allowing them to make fat profits with the help of cheap electricity has no justification,” he said.

Bitcoin mining is a kind of energy arbitrage. Miners make their money when the cost of producing coins is lower than the operation of the mine itself, including electricity.

With extremely low-cost electricity (that can go as low as 0.6 cent per kilowatt-hour), Iran has even become a luring place for overseas cryptocurrency miners.

“Cheap electricity has increasingly drawn crypto miners to Iran which is not in the interest of our power industry,” Haeri told reporters on Sunday.

It is said that miners in countries commonly seen as bitcoin mining powerhouses – China in particular – are looking at Iran for potential opportunities.

An informed source earlier had told CoinDesk news website that China has already deployed 2,000 miners in Iran.

Transactions in bitcoin, the world's first cryptocurrency, are estimated to use 48 terawatt hours of energy a year, an amount which could power 4.4 million US homes.