There is crypto trouble brewing in Iran as the US has accused the Middle Eastern government of using Bitcoin mining to circumvent the sanctions that the world hegemon has placed on Iran. This is a communication from Iran’s Assistant Minister of Industry, Trade, and Supply Saeed Zarandi.
He also added that Trump’s administration is actively working on blocking Bitcoin mining in the country. This news follows on from the US lobbying for Iran to be kicked out of the SWIFT system that is used to transfer money around the world.
Iran is a miner’s paradise but it comes at a heavy cost
The reason miners love Iran is due to the extremely low cost of electricity. The electricity supplied by the government is heavily subsidized and the cost difference is substantial. Whereas in the US electricity can cost about $0.14 on average, in Iran it costs as little as $0.03.
This makes mining extremely profitable and this industry has grown immensely in recent months. It has grown so much, that is has become a problem for the Iranian government. The growth in demand for electricity has become much larger than the supply that the government can provide. These concerns are echoed by a member of Iran’s Parliamentary Economic Committee.
“Mining cryptocurrencies has become a common and widespread activity in Iran, and it consumes considerable power which has caused problems for the country, especially in the hot season.”
Iran can get very hot during the summer months, and this leads to an increase in the usage of electricity with people using fridges, air, and freezers in greater number. It has gotten so bad that the government has had to resort to cutting power off and even confiscating mining equipment.
"Rajabi said the power for mining each Bitcoin equaled the power used by 24 residential units for an entire year", Bitcoin is not just a dystopian project in its premise. It's also an active participant in bringing about that dystopia via climate change. https://t.co/VWiNckRlzQ
— DHH (@dhh) July 1, 2019
@DHH, the creator of Ruby on Rails and Basecamp, tweeted a statistic that the Iranian government believes that the power for mining each Bitcoin is roughly equal to the power of 24 residential units use in a whole year. This can quickly become very difficult for Iran to follow through with providing enough electricity for its population.
A geopolitical piece in the economic battle between the US and China
The accusation by Mr. Zarandi could point to a deeper meaning. This could all, in fact, be a game between two superpowers that are playing a giant game of chess on the world stage. The Chinese have shut down Bitcoin mining but the private sector in China has not given up. They have migrated to other countries and Iran is a major beneficiary of this migration.
It is believed by many that the Chinese are using their private sector to help circumvent the sanctions that have been placed on Iran by using the Bitcoins that have been mined in the country. While China outwardly says they do not have any plans for cryptocurrency in Iran, this doesn’t seem to have reached the ears of many of its businesses.
All this is secondary to the overall picture of cryptocurrency in Iran. The people and the government want to move forward with a stablecoin that is based on gold. These games being played by China and the US will not deter them from this grand vision – and it shouldn’t. Iran could be a big piece of the crypto puzzle before too long.