Those who mine cryptocurrencies with power intended for domestic use will pay hefty fines, the Iranian government warned. The country is experiencing shortages due to reduced hydropower generation as authorities register a surge in electricity consumption for cryptocurrency mining.
Crypto Miners to Pay for Damages to the Power Grid
Hydropower plants in Iran have been working with limited capacity as a result of insufficient rainfall this year. At the same time, authorities say the minting of digital coins consumes more and more electrical energy. Illegal mining operations, often relying on electricity supplied to Iranian households, overload transformers, damaging the grid.
Unauthorized mining of cryptocurrencies affects electricity supply, noted Mostafa Rajabi Mashhadi, spokesman of the Iranian Ministry of Energy. Miners who run such facilities will be fined when identified and held responsible for the damages they cause to the electricity network, Mashhadi added, quoted by the Teheran Times.
Cryptocurrency mining has expanded rapidly in Iran following the government’s decision to legalize it as an industrial activity in 2019. In 2020, the Ministry of Industry, Mining and Trade issued over 1,000 mining licenses and power companies saw an opportunity to increase their profits by satisfying the industry’s energy needs. Last summer, power plants were also allowed to mine.
Constant energy price hikes and the obligation to supply electricity at stable prices have caused a large gap between revenues and expenditures in the electricity industry, according to Mohsen Tarztalab, head of Iran’s Thermal Power Plant Holding Company (TPPH). “We need new sources of income to fill this gap,” the executive added, pointing to the sale of electricity to cryptocurrency miners as an option.
Electricity Consumption of Crypto Mining Surges to 1,500 MW Daily
The Energy Ministry official also said that new figures reveal a huge surge in crypto mining in recent months. According to the latest available data, the sector reportedly uses up to 1,500 megawatts of electricity daily, a huge increase from the 300 megawatts registered in December. Mostafa Rajabi Mashhadi told Mehr news agency that only around 200 megawatts of that power usage is legal.
Electricity prices are subsidized in Iran and the low rates have already attracted Chinese companies who have established mining operations in some of Iran’s special economic zones. Earlier this year, the Ministry of Industry, Mines, and Trade estimated that unlicensed facilities in the Islamic Republic mine $660 million worth of cryptocurrency annually.
Interest in cryptocurrencies has increased significantly over the past year and many Iranians are investing in bitcoin and the like. In April, the Central Bank of Iran authorized local banks and exchangers to use cryptocurrency mined in the country in payments for imports. However, the regulator later warned against unrestrained crypto trading.
Do you expect cryptocurrency mining to continue to expand in Iran? Share your thoughts on the subject in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Credit: Source link