The Iranian government declared that digital currency mining is now prohibited during the summer season due to the dryness the country is experiencing lately.
The lack of rain has caused power shortages all over Iran and president Hassan Rouhani was obliged to take another measure against mining facilities. Earlier this month the Iranian Energy Ministry announced that digital currency miners who use household electricity will be sanctioned heavy fines and other penalties.
Unlicenced mining was creating many issues with the electricity supplying of the citizens. It was also causing damages to the local power grid and transformers, generating blackouts throughout the country. Even though licensed miners use much less electricity (300 megawatts compared to the 2,000 megawatts of the unlicensed ones), the new ban applies to all of them.
“The authorised mining of cryptocurrencies does not consume much electricity and needs just around 300 megawatts. However, it is unauthorised crypto miners that consume a lot of electricity; they consume about 2,000 megawatts. As of today, it will be forbidden even for authorised miners to mine cryptocurrencies until late September.”Hassan Rouhani, president of Iran
Cryptocurrency mining is widely spread in the country of Iran, especially after 2019. After the Iranian government categorized mining as an industrial activity, a large number of companies started to mine all over the country. Low-cost electricity and power plants helped in the blossoming of this industry. More than 1,000 licenses were issued by the Ministry of Industry, Mining, and Trade in 2020.
Due to issues linked with the electrical grid, power plant companies proposed to offer mining activities their excess electricity. The government agreed to the proposal, but since it wasn’t able to guarantee subsidies on their fuel supplies permitted them to mine digital currency themselves. But none of these measures solved the problem. Iran experienced an unusually dry spring, and further actions needed to be taken.
The Ministry of Intelligence has been establishing committees all over the country that will be in charge to locate mining farms operating without a license. Tavanir, the state-run grid operator, raised the reward for tip-offs to those reporting illegal mining facilities this year. The recompense went up to 200 million rials, or 873 US dollars, which is more than seven times the minimum monthly wage in the country.