Cryptominers Are Back

EghtesadOnline: Authorized cryptocurrency miners in Iran have been allowed to resume operations after fuel supply to electricity power plants returned to normal, a spokesperson for Distribution and Transmission Company (Tavanir) said.

News ID: ۷۸۶۰۶۲

21 February 2021

"Power plants are now receiving sufficient gas [as feedstock] and there is no problem in fuel supplies,” Mostafa Rajabi Mashhadi was quoted as saying by ILNA.

After widespread power outages across the country in mid-January, Tavanir ordered licensed cryptocurrency mining farms to halt operations temporarily to reduce power shortages.

As power outages spread utilities stepped up efforts to crackdown on illegal mining, especially after crypto prices jumped to unprecedented levels tempting more miners to join the lucrative business.

According to Rajabi Mashhadi, increased monitoring enabled Tavanir to detect illegal cryptomining farms furtively using an estimated 110 megawatts of subsidized electricity from the national grid.

Tavanir has the authority to shut down the illegal cryptomining centers. The company identified illegal subscribers who used 302 megawatts for mining the digital currency in the past few months, according to the senior energy official.

Ghulamali Rakhshani-Mehr, Tavanir’s deputy for power distribution, spoke about confiscating 70,000 illegal mining equipment, 20,000 of which were identified after the company launched the nationwide campaign last month to detect illegal electricity users and the unauthorized cryptominers.

As temperatures plunged in winter in January rising home gas consumption shot up and cut gas supply as feedstock to power plants, forcing utilities to use mazut, a highly polluting and low quality fuel oil.

The unprecedented power use was ascribed largely to the steep rise in cryptocurrency prices that has apparently made cryptomining more lucrative in and outside Iran.

The price of a bitcoin crossed $50,000 for the first time on Tuesday, surging even higher on Wednesday, global news outlets reported.

The digital currency broke through the $20,000 mark for the first time in mid-December and hit an all-time high of $52,340 on Wednesday raising added interest in the digital money.

Play by the Rules

In a talk Thursday with IRIB, the state broadcaster, Mohammad-Hassan Motevalizadeh, Tavanir's managing director told legal miners to get official permits. "The Industry Ministry is ready to issue permits to legal cryptominers," he was quoted as saying.

In July 2019 the government said it would recognize cryptomining as a legal industry and developed a legal framework to guide the activities of miners.

"As per a government decision, this industry won't get subsidized energy due to its access to foreign currency income and high profits," Motevalizadeh said, referring to the lucrative cryptomining business.

Rajabi Mashhadi said earlier that 24 cryptomining units using 310 MW had permission from the Industry Ministry. "Nearly 1% of domestic power output is used by legal cryptocurrency  farms."

Those who use subsidized power, such as unlicensed miners, will be fined depending on the loss they inflict on the national grid. "The mining places will by disabled from the national grid and they will be prosecuted," he warned.

As per Tavanir rules, authorized miners pay 4,800 rials for one kilowatt-hour -- half the electricity export rate in autumn, winter and spring. Billings are based on 19,300 rials/kw or twice the power export tariff in summer (June to Sept).