The mining of cryptocurrencies in Iran is expected to increase as the government gives power plants the green light to mine cryptocurrencies such as Bitcoin (BTC). This news is the latest in the positive development in virtual currency de-mining that emerged from the country over the past year.
Since the legalization of cryptocurrency mining in July 2019, the Iranian authorities have tried to ensure that market participants only operate after obtaining the necessary licenses. By enabling power plants to mine cryptocurrency, Iran is joining other emerging hubs as global “hash wars” increase in frequency.
Iran has seen an influx of miners due to its cheap electrical energy, making it one of the major mining countries outside of China. In the meantime, major players in North America have expanded their business through several portfolio acquisitions over the past few months.
Licensed crypto mining only
The Iranian authorities have given the power plants the green light to mine cryptocurrencies. The mandate comes with a limitation, however, as power plant operators cannot use subsidized fuels. As a result, Iranian power plants that want to mine Bitcoin must obtain a license from the government and use approved electricity fees set by the authorities.
Banning the use of subsidized fuels by power plants is a measure the government is taking to ensure that these activities do not affect electricity supplies to the population and other industrial sectors in the country. Babak Behbudi, co-founder of SynchroBit Hybrid Exchange, digital asset trading platform, told Cointelegraph that this news marks another milestone for cryptocurrency mining in Iran:
“It’s a great achievement because it shows that the Iranian government has recognized the cryptocurrency mining industry as a fact! This means that the cryptocurrency can be viewed as a legal and regulated asset that people can use to do something for their business and their lives. ”
The Iranian authorities claim that licensed cryptocurrency mining is not a new development. In fact, the country’s Department of Industry, Mining, and Trade issued more than 1,000 cryptocurrency mining licenses in January. Before rationing, some miners moved their operations to mosques for free electricity and prompted the government to take drastic measures due to the sudden surge in energy consumption.
A compromise was soon found as the government allowed cryptocurrency mining and even encouraged more participants to move their operations to the country with the promise of tax breaks. Iranian miners who return their foreign profits to the country are entitled to certain tax breaks. As part of the campaign to allow only licensed cryptocurrency mining, the government has offered whistleblowers who expose illegal cryptocurrency mining activities bonuses totaling around 100 million riyals ($ 2,375 USD) in bonuses.
The Iranian government sets the agenda
In May, Iranian President Hassan Rouhani urged officials from the Iranian Central Bank, Ministry of Energy, and Ministry of Communications and Information Technology to develop a comprehensive national strategy for cryptocurrency mining. The move signaled a greater intention by the government to include cryptocurrency mining in its stimulus plans. With excessive inflation and an economy aggravated by the coronavirus outbreak, the Iranian government is increasingly considering the benefits of increased involvement in the country’s crypto industry.
Along with Egypt, Kuwait and Myanmar, Iran has one of the lowest electricity tariffs in the world. Inexpensive electricity is often a catalyst for miners who make good profits. Outside of China, Iran controls the fifth largest share of the global distribution of bitcoin mining hash rates. In fact, the surge in cryptocurrency mining activity in Iran in 2019 resulted in a slight decrease in cryptocurrency mining for clean energy.
Global distribution of hash rates