Utility Shuts More Illegal Cryptomining Centers

EghtesadOnline: Closing unauthorized cryptomining farms to prevent blackouts remains on the agenda of the Iran Power Generation, Distribution and Transmission Company (Tavanir) as demand for electricity remains high.

News ID: ۷۸۶۹۹۷

11 September 2021

As per a recent Tavanir report, the total number of detected centers has reached 5,380 and 216,758 pieces of hardware have been seized from the illegal operators, ISNA reported.

The farms' collective power consumption is equal to the consumption of 800,000 households or 2 million people, the utility company said.

Energy Ministry data show a considerable jump in electricity consumption in the past several months. The utility has often  blamed cryptomining as one of the reasons behind the nationwide power shortages, saying that households would face 80% less blackouts if the digital miners halted their activities

Mining virtual currency is legal in Iran and miners are allowed to operate under rules approved by the government in July 2019.

While cryptomining is accepted by the government as legal, illegal farms have cropped up with increasing speed using subsidized electricity because they must pay much higher tariffs if they operate with a permit.

Opaque Rules

Businesses and experts blame cumbersome rules for obtaining licenses along with the high electricity tariffs for the growth in underground cryptomining.

In April the Energy Ministry revised cryptomining rules as per which 16,574 rials is charged for one kilowatt-hour of electricity. The new rate is more than three times the previous 4,800 rials for one kilowatt-hour.

Electricity prices for cryptomining are set as per power export tariffs and based on daily currency rates at Nima -- a currency platform where forex is traded among importers and exporters.

Currently 56 cryptomining farms are authorized to operate with a total consumption of 400 megawatts.

To ease mounting pressure on the national power grid and prevent blackouts, former president Hassan Rouhani in May ordered a blanket ban on all cryptomining until the end of summer.

Earlier this month Tavanir announced that the ban on cryptomining will be lifted on Sept 22, as the company hopes power consumption will decline by the end of summer creating the conditions for the operation of legal digital currency miners.

Exaggerations

Tavanir says illegal miners are consuming almost 2,000 MW. This is while the Ministry of industries, Mining and Trade, the body in charge of authorizing cryptomining units, has denied the claim.

Figures announced by Tavanir seem to be highly exaggerated. Consumption of illegal miners is considerably lower than the 2,000 MW claimed by the utility. This amount would equal power used by 3 million pieces of hardware, an official with the ministry said last week.

Iran has an installed capacity of over 85,000 megawatts while actual production is near 60,000 MW.

The difference is due to power loss and the fact that power plants usually do not operate at full capacity because of several reasons, such as routine repairs/maintenance, decline in rainfall and low levels of water in dams producing hydroelectric power.