Iran has been using cryptocurrency mining to swerve around US sanctions. According to blockchain analytics firm Elliptic, around 4.5% of all Bitcoin mining takes place in Iran, allowing it to earn close to $1 billon a year from cryptocurrencies that can be used to lessen the impact of U.S. sanctions.
Iran, May 26, 2021 /AlexaBlockchain/ – Iran has temporarily banned Bitcoin and other cryptocurrency mining until September 22, President Hassan Rouhani said on Wednesday, due to shortage of power in many cities.
What happened? “The ban on the mining of cryptocurrencies is effective immediately until September 22 … Some 85% of the current mining in Iran is unlicensed,” Rouhani said in a televised speech at a cabinet meeting.
Bitcoin and other cryptocurrencies are created through a process known as mining, where powerful computers compete with each other to solve complex mathematical problems. The process is highly energy intensive, often relying on electricity generated by fossil fuels, which Iran is rich in.
What forced Iran to Ban Bitcoin Mining? As next month’s presidential election approaches, the blackouts have been widely criticised by Iranians. The government has blamed the power cuts on cryptocurrency mining, drought and surging electricity demand in summer.
Why does it matter?
Iran has been using cryptocurrency mining to swerve around US sanctions. According to blockchain analytics firm Elliptic, around 4.5% of all Bitcoin mining takes place in Iran, allowing it to earn close to $1 billon a year from cryptocurrencies that can be used to lessen the impact of U.S. sanctions.
Iran’s economy has been hit hard since 2018, when former President Donald Trump exited Tehran’s 2015 nuclear deal with six powers and reimposed sanctions.
U.S. President Joe Biden’s administration and other global powers have been in talks with Iran to revive the deal.
Iran allowed crypto mining in recent years, offering cheap power and requiring miners to sell their bitcoins to the central bank. Tehran allows cryptocurrencies mined in Iran to be used to pay for imports of authorised goods.
The prospect of cheap power has attracted miners, particularly from China, to Iran. Generating the electricity they use requires the equivalent of around 10 million barrels of crude oil a year, or 4% of total Iranian oil exports in 2020, according to Elliptic.
