Industries Ministry: Cryptomining Capacity Near $1.4b

EghtesadOnline: With estimated cryptomining capacity at $1.4 billion, Iran is among the top in the world, a senior Industries Ministry official said.

News ID: ۷۸۵۸۲۴

24 January 2021

"Cryptocurrency worth $9.7 billion is mined annually across continents. Annual capacity in Iran is near $660 million, which is 7.5% of the total global capacity," Alireza Hadi, the Industries Ministry's investment department was quoted as saying by IRNA.

Pointing to permits to be given to new miners, he said "Iran is capable of mining 42,000 digital currencies a year worth $1.4 billion," if and when the new miners join the pack.

Cryptocurrencies have a global turnover of $153 billion a day. There is no reliable estimation of the turnover in Iran. However, average daily crypto transactions is estimated between $10 million to $40 million.

Virtual currency has gained popularity around the world but it gained special traction in Iran after former US president Donald Trump unilaterally withdrew in 2018 from Tehran's nuclear accord with world powers and imposed economic sanctions.

While trade in virtual currency is banned in the country, unofficial and anonymous transactions in cryptocurrencies has reportedly allowed individuals and companies to evade the tough US restrictions that have crippled Tehran’s trade and banking ties with the international financial system.

The Central Bank of Iran said earlier that it was trying to develop a national cryptocurrency to promote financial and payment services in the domestic banking industry.

Despite the ban, mining the virtual currency is considered a legal industry and miners can operate legally under rules approved in July 2019.

So far 24 cryptomining centers and farms using 310 MW have operating permits from the Ministry of Industries, Mining and Trade, according to the ministry officials

The government sells electricity to legal miners at tariffs much higher than the subsidized rates to regular subscribers, which has exacerbated illegal crypto mining.

Electricity bills sent to authorized miners are based on average power export tariffs and as per forex rates in the secondary market, known as Nima, where export companies sell their proceeds to importers.

As per earlier announcements, miners are charged 4,800 rials for one kilowatt-hour that is almost half the 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).

Blamed for Power Outages

The national power grid came under extraordinary pressure last week as power outages were reported across the country and blamed on the upsurge in unauthorized cryptomining following the unprecedented rise in international cryptocurrency prices.

Trying to restore supply, energy officials announced stringent measures to limit cryptocurrency mining, including authorized miners.

The Power Generation, Distribution and Transmission Company (Tavanir) temporary closed a major Iranian-Chinese mining center in Rafsanjan in southeast Kerman Province. The decision came after the licensed operation was said to be using 175-megawatt hours of electricity per day.

It said those illegally using subsidized power for mining will be fined depending on losses they inflict on the national grid. "Their mining places will by disconnected from the national grid and those responsible will be prosecuted," Tavanir said.