In 2019, the Iranian government announced it would regulate mining activities in the country. Interested miners were required to get a permit from the Ministry of Industries. Semnan province leads with six mining farms out of the 30 licensed companies. After legalizing bitcoin mining, the government licenced over 1000 companies in January 2022.
Ban on Crypto Mining Activities
The Iranian government banned bitcoin mining in the country in May 2021. The ban announced by the former president Hassan Rouhani was due to a strain on electricity power majorly caused by illegal mining. While authorised bitcoin miners consume modest 30 megawatts, illegal mining activities use up to 2000 megawatts putting a strain on the electricity grid.
Since April, the ministry of Energy has also increased power tariffs for miners. The companies buy power at export rates of $0.34 per kilowatt-hours. This cost is fourfold the standard rate before April. Besides prohibiting bitcoin mining, the government has confiscated 200 000 illegal mining rigs in 12 months.
A Reason To Smile
The good news is that miners have a reason to smile. The Iranian Ministry of Industries, Mining and Trade will lift the Bitcoin mining restriction on September 22. The announcement was made by the Iran Power Generation, Distribution and Transmission Company, Tavanir. According to the Utility spokesman, Mostafa Rajabi Mashhadi, they expected electric power usage to fall by the end of summer. This will create perfect conditions for resuming bitcoin mining. After announcing this news, the price of Bitcoin slightly jumped and is now according to CoinCheckup.com traded at $43,626, similar growth has also been according to coincheckup.com recorded for a relatively new coin called Solana, which now hovers around the 150 USD mark.
Power demand in the country goes up during hot weather. Initially, the government had planned to shut down mining activities during peak hours. However, they decided to impose a nationwide ban until the end of the summer season. Besides using massive power, the Utility claims the miners damage the power grid, with losses amounting to $4 million.
Government Control on CryptoCurrencies
The Iran government has gone a notch higher to control and centralise the use of cryptocurrencies in the country. The parliament has proposed a bill that will prohibit using foreigner mined cryptocurrencies for local transactions. This move seems like a plan to localize crypto mining. Recently, the tax agency in the country also called for the establishment of a legal framework for crypto trading activities. This regulation will boost the scope of the crypto acceptance policy.
Positive Effect on Economy
Bitcoin has become a significant source of income for the country. Elliptics guide’s projection shows that mining activities in Iran will rake in $1 billion in annual revenue. However, the ban has affected this goal significantly. However, the resumption of mining will solve this problem.
Miners who had dispersed will resume operations, a factor that could inject more revenue into the economy. With the crackdown of bitcoin mining in China, lifting the ban in Iran could propel the country to the top spot in crypto mining.
Iran is also facing sanctions from the US government. This means that MasterCard, PayPal and other international payment technology can’t operate in the country. This has made it very difficult for Iranians to conduct online international transactions such as online purchases and money transfers. The bitcoin mining ban exacerbated the situation. Therefore resumption of mining activities is welcome good news. Iranians consider cryptocurrency as an investment and payment method.
Bitcoin mining is quite an essential activity in the circulation, development and maintenance of its blockchain ledger. In other words, mining more bitcoin boosts its circulation. Although bitcoin price is pretty much unpredictable, the resumption of mining activities in Iran will increase competitiveness and encourage crypto enthusiasts to invest more in bitcoin. Despite the high volatility and restriction by the international banking system, bitcoin has immense growth potential.
Source: Plato Data Intelligence