Illegal Cryptomining Could Impact Winter Power Supply

EghtesadOnline: Iran Power Generation, Distribution and Transmission Company, Tavanir, has warned about the possibility of power cuts in winter, considering the persisting pressure on the national grid apparently caused by illegal cryptocurrency mining.

News ID: ۷۸۷۱۳۴

11 October 2021

The rapidly increasing demand for electricity by unauthorized cryptominers is likely to cause blackouts during winter, when gas consumption too is at peak, like what happened in the past summer, Tavanir said in a press release.

"Power consumption is expected to grow when cryptocurrencies record growth in prices as is the case in other countries.”

The cost of power is negligible for illegal miners who make use of subsidized electricity; surprisingly, this results in considerable growth in power consumption when prices of cryptocurrencies decline and miners across the world halt their activities.

Cryptominers have been blamed for the chronic power shortages in recent months that have fueled frustration across the board despite the fact that the share of legal miners in the total electricity consumption is meager.

In July 2019 the government said it would accept cryptomining as a legal industry. Miners were required to acquire license from the Ministry of Industries and pay their electricity bills based on export rates. The ministry has issued license for 30 cryptomining units, according to reports published on the ministry website.

In April the Energy Ministry revised regulations for cryptomining as per which 16,574 rials is charged for one kilowatt-hour.

Tariffs are cut by half when household consumption is low and the grid is not under pressure as is the case in summer.

Rates double during restrictions like when power plants do not receive enough gas as feedstock or the national grid faces maintenance and other technical problems supplying households.

The base tariff is four times the previous 4,800 rials for one kilowatt-hour. Electricity prices for cryptomining are set according to export tariffs and subject to currency rates in Nima -- the currency platform where forex is traded among importers and exporters.

Call for Severe Punishment

As the power situation worsened Tavanir started shutting illegal cryptomining centers to prevent shortages and safeguard the national network.

According to Tavanir, more than 212,373 mining equipment was seized in the past 12 months. The equipment reportedly caused 180 trillion rials in damage to the utility and power distribution equipment.

Unlicensed miners are still using almost 2,000 MW, according to Tavanir.

The utility said that the current punishment for illegal cryptominers seems to be not preventive enough, calling for the policymakers to go stricter in confronting unauthorized miners by setting more severe punishments.

High consumption is not the only problem as the unregistered miners also damage the power distribution systems, which has resulted in rolling blackouts during the recent hot summer months.

As per law, mining cryptocurrencies without having an operational license from the ministry of industries is illegal, the utility will confiscate illegal miners' equipment and their electricity will be cut, they are also required to pay for all the damages they have incurred to the national grid.