Iran: Crackdown on Illegal Crypto Farms

EghtesadOnline: Authorities closed 1,620 illegal cryptocurrency mining farms that were used 250 megawatts of electricity since July 2019, when mining was legalized, spokesman of the Power Generation, Distribution and Transmission Company (Tavanir) said.

News ID: ۷۵۱۷۷۲

03 January 2021

"Tavanir is strict in dealing with unauthorized miners, those who use subsidized power, such as unlicensed miners, will be fined as much as the loss they impose on the national grid. Their mining places will by disconnected from the national grid and face prosecution," Mostafa Rajabi Mashhadi told the state broadcaster on Saturday.

In July 2019 the government said it would recognize crypto mining as a legal industry. This was first welcomed by miners, but later they claimed that the electricity tariffs were too high and went underground with their business to deceive the utilities.

The Energy Ministry said electricity bills for miners will be based on average power export rates and as per forex parity rates in the secondary market, known as Nima (Persian acronym for Integrated Forex Deals System).

As per earlier announcements, miners are charged 4,800 rials for one kilowatt-hour that is half the electricity export rate in autumn, winter and spring. However, billings are planned to be based on 19,300 rials/kw, twice the price for exported electricity in summer (June to Sept). So far 24 cryptomining units using 310 MW have permit from the Ministry of Industries, Mining and Trade, he said.

Call on Whistleblowers

Rajabi Mashhadi referred to government plans to offer incentives to whistleblowers who name unauthorized miners. "Almost 500 cryptomining farms were uncovered with the help of whistleblowers."

Incentives include rewards worth 100 million rials ($400) for those who cooperate with energy officials in identifying illegal crypto mining centers.

Tavanir is legally authorized to shut down illegal crypto mining businesses. The sharp increase in the price of cryptocurrencies in recent months has apparently made mining more tempting to Iranians.

Earlier in December, the judiciary reported a jump in court cases related to illegal cryptomining calling for new measures to further restrict subsidized electricity for mining cryptocurrencies.

Average daily crypto transactions in Iran is estimated at $10 million to $40 million. CBI officials, however, deny rumors about high profits arising from cryptocurrency trade.

Sources have recommended the government to use cryptocurrency to help pay for imports disrupted by the US banking sanctions. But the CBIs says “Studies show cryptocurrencies had no significant role in Iran’s economy and made no contribution to bypassing the sanctions.”