Iran has announced a four-month ban on mining any sort of cryptocurrencies such as Bitcoin after cities suffered unplanned power outages.
President Hassan Rouhani informed a Cabinet meeting that the main reason for the power outage was a drought that had disrupted hydropower production.
Impact Of Crypto Mining
But he said cryptocurrency mining practices, 85% of which are not licensed, draw more than 2GW from the grid each day.
It is estimated that 4.5% of all Bitcoin mines take place in Iran.
According to analytics company Elliptic, the project allows the country to pass sanctions and receive hundreds of millions of dollars in crypto-assets that can be used to buy imports.
Iran’s banks have been cut off from the global financial system and their oil exports have plummeted, depriving them of much of their hard-earned cash and revenue, as a result of US sanctions imposed in 2018 when then President Donald Trump abandoned a historic nuclear deal.
How Is Bitcoin Mined?
Bitcoin operates in blockchain, a digital transaction logger. Miners audit Bitcoin transactions in exchange for an opportunity to acquire the digital currency. It requires enormous computing power, which in turn uses huge amounts of electricity.
Elliptic said Iranian authorities officially recognized cryptocurrency mining pactice in 2019 and later enacted a licensing law that required miners to identify themselves, pay high electricity taxes, and sell their bitcoins to Central Bank of Iran.
Electricity Shortage
The national electricity company said on Saturday licensed cryptocurrency mining sites have already closed their operations to ease the burden.
But Mr Rouhani on Wednesday said that unauthorized structures use six to seven times more power and therefore should ban all cryptocurrency operations by 22 September.
The President also said that the Minister of Energy had been sincere in apologizing to the Iranian people for the unplanned power outage that affected businesses and families in Tehran and many other cities last week.
