Iran has yet again banned crypto mining activities for four months. This follows widespread power outages that are causing a public outcry.

On May 26, President Hassan Rouhani announced a halt to all crypto mining activities, including legal Bitcoin mining. The activities will remain closed until September 22. The Proof of Work (PoW) framework used by Bitcoin miners is a power-intensive activity that is also accused of causing environmental degradation.

Iran Periodical Frictions with Miners

Iran is a major hub for Bitcoin mining activities which has attracted a negative backlash from environmentalists who accuse mining rigs of causing damaging effects to the carbon footprint and this threatening environment conservation efforts.

Rouhani stated that Bitcoin mining consumed around 300MW of electricity, but this was a small number compared to illegal mining activities that consumed up to 2000MW of electricity.

Iran has cracked down on illegal mining activities in the past. The country’s Intelligence ministry cracked down on illegal miners by offering a $900 reward to those who gave out details that would help flush out illegal miners.

Because of high-energy consumption, various provinces and especially Tehran, have dealt with a menace of power outages leading to public frustrations. The power outages have affected homes, businesses, and even hospitals, usually affected by cuts that can happen throughout the day.

Just a Scapegoat?

The government has blamed Bitcoin miners for the outages. However, many citizens believe that this is just a scapegoat to deal with the main issue. According to many observers, the outages are caused by mismanagement of the country’s power grid and low resources. This was even confirmed by Eshaq Jahangiri, Iran’s first vice president, who confirmed that the power infrastructure needed adequate resources.

Recently, the head of the digital economy commission in the Iranian parliament, Motjaba Tavangar, also stated that research shows that Bitcoin mining takes up around 1% of Iran’s power output. According to the legislature, “The reason behind the power outages is not cryptocurrency mining, it’s stopping funding and the old distribution and generation network.

This will not be the first time that Iran is shutting down crypto mining during summer. The country had done the same thing in the past to help offload the country’s power grid when rainfall levels were at their lowest.

Iran accounts for around 4.5% of Bitcoin mining activities globally and accumulates around $1 billion worth of revenues. The revenues from Bitcoin mining are useful in helping Iran recover from the harsh economic sanctions imposed by the United States.

The sanctions have also created high inflations in the country, which has made people turn into cryptocurrencies as a store of value. The use of cryptocurrencies to hedge against inflation has not started recently, given that other countries have also been using this alternative. Argentina and Venezuela and both facing hyperinflation, and citizens are rushing towards the crypto market.

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