Iran President Hassan Rouhani recently announced a temporary ban on cryptocurrency mining as there were repeated blackouts across the country. The president said that the ban would be lifted on September 22nd.
The BBC reported that the cause of the blackouts was due to the drought that had massively reduced the amount of water needed for hydroelectric power.
The president pointed out that cryptocurrency mining consumes about 2GW of electricity every day. This places quite a heavy burden on the nation’s grid that is already struggling to meet demand as it is
Bitcoin is an energy-intensive process and Iran is estimated to process up to 4.5% of the global mining. It has been a lucrative business for an economy that has been hurting due to sanctions imposed by the US during the Trump era when he backed out of the nuclear deal. Under the sanctions, Iran’s banks have been completely cut off from the world’s financial system while their oil exports have significantly reduced denying them of much-needed revenue.
The blackouts were however too much to bear as citizens expressed their frustrations on social media. Images of the impact of the blackout on businesses, hospitals and homes were shared widely as they struck several times a day.
Cracking down on unlicensed miners
The government has also intensified its crackdown on unlicensed miners who are estimated to make up to 85% of the total number. The BBC reports that the country runs a system where licensed miners are required to pay extra for electricity and also sell their coins to Iran’s central bank.
While the President even poked a joke – “everybody has a few miners laying around and are producing Bitcoins” – due to the high number of miners, he was also quick to point out that one of the main reason for the ban was a large number of unlicensed miners. These miners have even been rumoured to be using free electricity given to mosques as reported by the deputy minister of energy.
The national electricity company said all of the nation’s licensed miners had voluntarily shut down operations. Illegal miners however still remained operational and were reported to be using six to seven times more power. Therefore, the president had to ban all cryptocurrency mining.
The ban comes on the back of a turbulent week for Bitcoin as nations such as India and parts of China have been strengthening their stance against cryptocurrencies. Moreover, tech mogul Elon Musk recently announced that Bitcoin would no longer be accepted as payment for Tesla cars. This was primarily because of the large carbon footprint caused by mining, especially in China who rely on coal when river levels run low.
Although the ban will definitely hurt the Iranian economy in the short run, it will significantly reduce the nation’s carbon footprint way down the line.