Iran Suspends Energy Exports Due to Mining And Hot Climate
Iran has halted energy exports as crypto mining operations increase and the climate condition changes. The Arab country became attractive to Bitcoin and crypto miners owing to its cheap electricity and China’s crackdown on miners, although the country has legalized crypto mining since 2019. However, Iran has not been able to meet the demand for electricity within the country and outside, hence its suspension on electricity exports.
The influx of miners into Iran necessitated the demand for electricity, taking it to the peak. According to reports from Tevanir, the power distributing company in Iran, it has reduced energy exports to zero level to prevent shortage of electricity within its territory. One of its energy exports dependent, the Herat Province in Afghanistan, which sourced as high as 70% of its energy supply from Iran is no longer serviced in order to cater for national consumption.
The data report issued by the electricity generation company revealed that energy on a day-to-day basis surged to 65,000 Megawatts while the country is only able to produce 54,000 Megawatts. The report stated that apart from the summer climate being responsible for the high demand, Bitcoin and crypto mining operations also contributed a great deal to the surge in energy consumption. Interestingly, Iran discounts electricity costs for the mining companies operating there.
Unlicensed Miners in Iran Face Pressure from Iranian Authorities
While crypto mining legalization and regulation in Iran date back to 2019, unlicensed miners have also taken advantage of the country’s friendly disposition towards mining and were using household electricity for their operations. This went on until the Iranian authorities started clamping down on them and as well as imposing fines for their unapproved operations. During a raid on the unlicensed miners, Iranian authorities confiscated about 7000 mining rigs. Activities of unlicensed miners took a toll on electricity distribution as authorities reported power outages in some provinces.
In a recent development, Iranian president, Hassan Rouhani enjoined licensed miners to halt their operations pending the end of the summer months. President Rouhani also said that the cessation of mining activities would last until the end of September to provide more room for domestic electricity usage. The president attributed 85% of mining operations in the country to unlicensed miners.
Iran to Use Crypto as Payment for Imports
Iran is also proposing to prevent foreign-mined cryptocurrencies from being used in the country. In accordance with the plan, it is proposing to have an official cryptocurrency which will be used for transactions and have the Central Bank of Iran as the regulatory body backing it. In the same vein, Iran passed a legislation last year that allows cryptocurrencies to be used as payments for imports.
Iranian government sees this as a medium to escape the economic sanctions placed on it by the US. The ministry of Industry, Mining and Trade is now the body in charge of issuing licenses to mining companies. It issued 30 new operating licenses and over 2,500 mining units permits at the beginning of July. Iran has been able to generate over $1 billion from mining taxes.
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