The police chief of Tehran, Hossein Rahimi, revealed that Iran’s largest cryptocurrency mining farm was discovered in an abandoned factory in the western part of the country’s capital.
“The largest cryptocurrency mining in the country, containing 7,000 cryptocurrency production devices were found in the west of Tehran, which had a great impact on the lack of electricity in the capital,” the IRNA news agency quoted Rahimi as saying on June 22.
He said that this illegal farm was consuming about 4% of Iran’s electricity, and added that the police also captured 3,000 more mining devices in other parts of Tehran in the past 48 hours.
Earlier, Iran’s Energy Minister Reza Ardakanian announced that all legal mining facilities had been turned off by September 22, as unauthorized cryptocurrency mining has put the power industry on the brink of a crisis.
He said that Iran is facing another widespread wave of power outages, adding that crypto-mining has consumed 2,000 MW in the country.
Iran has temporarily banned cryptocurrency mining after some of the country’s major cities experienced repeated blackouts. The country’s consumption has exceeded 61,000 megawatts which could lead to more power cuts.
The Paris climate agreement has restricted Iran’s power generation, rendering it incapable of meeting the increased demand for electricity. Cryptocurrency mining in Iran has exacerbated problems caused by drought, which has cut hydropower supplies, and heat, leading to a sharp increase in air conditioning use.
A total of 300 MW had been allocated for licensed crypto-currency mining. Unauthorized use reached 2,000 MW and unlicensed farms accounted for nearly 90% of crypto mining in Iran.
According to research conducted by Elliptic, a global provider of crypto compliance solutions, about 4.5% of all bitcoin mining globally took place in Iran between January and April of this year. The research estimated that Iran could generate $1 billion annually from cryptocurrency mining activities.
In October 2019, Iran allowed foreign nationals to invest in mining cryptocurrency, such as Bitcoins, as a way to circumvent US sanctions which heavily cut off the country’s access to foreign exchange earnings. The subsidized energy and the cheapest electricity prices in Iran made the country a prime location for foreign investors to mine Bitcoin in the Islamic Republic.
Former US President Donald Trump’s administration imposed harsh sanctions on Iran, including sanctions on Iranian financial institutions. Oil exports have plummeted 70% over the past decade, leaving the country in a deep recession with soaring unemployment and periods of civil unrest.
Bitcoin is a popular cryptocurrency that allows people to make instant transactions worldwide without the need for intermediate institutions like banks. The miners’ job is to produce the codes by employing computers with powerful processing units, which consume a large amount of electricity.