Cryptominers Asked to Halt Activities Again

EghtesadOnline: Iran Power Generation, Distribution and Transmission Company, Tavanir, has asked authorized cryptomining centers to suspend their activities to prevent possible blackouts during winter.

News ID: ۷۸۷۵۰۵

26 December 2021

In a talk with IRIB, Mostafa Rajabi Mashhadi, the company's spokesman, said the "Energy Ministry is implementing measures since last month to reduce the use of liquid fuels in power plants, including cutting licensed crypto farms' power supply, turning off lampposts in less risky areas and stringent supervision of consumption."

Rajabi Mashhadi said “Power plants have managed to save fuel for the coming [winter] months. However, consumers need to exercise extra caution in their gas and electricity consumption."

Tavanir earlier warned about the likelihood of power cuts in winter due to the pressure on the national grid partly caused by cryptocurrency mining.

In Iran mining cryptocurrencies without a valid permit from the Ministry of Industries is illegal. When found, the utility seizes the machines of illegal miners and disconnects their electricity. Illegal mining units are penalized and must pay fines for damaging the grid.

In May the former president Hassan Rouhani ordered a blanket ban on all cryptomining until the end of summer. Legal miners were allowed to resume operations in the fall, though their operations are interrupted again.

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

Illegal farms have cropped up with increasing speed in recent years using subsidized electricity because they must pay much higher tariffs if they operate with a permit.

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 feedstock and undergo routine maintenance.

A Different View

Businesses and experts blame cumbersome rules for obtaining cryptomining licenses along with the high electricity tariffs for the growth in underground mining and say power shortages are less due to the illegal mining of digital currency and more a function of mismanagement and ageing infrastructure and technology.

Officials at the Ministry of Industries, Mining and Trade in the past denied “exaggerated” claims by Tavanir about the role of illegal cryptominers in the power shortages.

"Figures announced by Tavanir seem to be highly exaggerated. The consumption of illegal miners is considerably lower than the 2,000 megawatts estimated by the utility. This amount would equal power used by 3 million machines.”

"Legal miners are not disrupting power supply," Mohammad Khodadadi, head of the cryptominers power supply section at Tavanir, said in a recent interview.