Mining Ban Sparks Negative Reactions From Iran’s Crypto Community

The recently reintroduced seasonal ban on cryptocurrency mining has provoked backlash from the local crypto community. This week, the country’s power distribution company ordered miners to suspend activities citing electricity shortages during the hot summer months.

Restrictions on Crypto Mining Are Ousting Iran From Global Coin Minting Industry, Critics Say

After last year crypto miners were forced to deal with interruptions in power supply on more than one occasion, the Iran Power Generation, Transmission and Distribution Company (Tavanir) has told them to halt operations again, until the end of this summer. The utility is citing expected electricity shortages in the next three months of hot weather, when demand will spike due to rising consumption for cooling.

The company’s spokesman, Mostafa Rajabi Mashhadi, has been quoted as stating that the measure should help reduce the heavy load on the national grid during the peak season. According to a report by the Iranian business news outlet Way2pay, stakeholders have objected to the move, insisting that it’s unwarranted and will hurt Iran’s crypto mining industry, as in 2021.

The power deficit and the frequent blackouts were partially blamed on the increased power usage for mining, both legal and illegal, and last May licensed miners were ordered to shut down. They were allowed to resume operations in September, but then again asked to unplug their equipment to help alleviate the shortages in the cold winter months, when demand of energy increases for heating purposes.

Last year’s multiple shutdowns hit the miners hard and Iran’s share in the global hashrate fell to just 0.12%, according to the Bitcoin Mining Map of the Cambridge Centre for Alternative Finance, effectively ousting Iran from the planet’s crypto mining industry. The similar events now have again provoked numerous reactions from the space and warnings that Iran is lagging behind its competitors.

Iranian Miners Have Few Remaining Options to Choose From

Some Iranians believe that removing the cryptocurrency miners from the equation would have little effect on the power supply as the legal mining facilities account for a relatively small share of the network’s load. The report notes that it’s unclear how effective the ban on authorized mining will eventually turn out to be.

It’s also unclear why all miners across the country are supposed to cease activities as in reality, some crypto farms operate in parts of the country that do not experience electricity shortages. Another objection comes down to the questions why only miners should be disconnected from the grid and why this should happen so suddenly.

Iran legalized crypto mining as an industrial activity in 2019. Since then, dozens of companies have applied for a license from the Ministry of Industry. Tavanir’s executive responsible for the mining sector, Mohammad Khodadadi, reminded that the government resolution explicitly states that miners are not allowed to buy electricity during peak times of consumption. Their contracts contain a similar clause as well, he added.

According to Way2pay, Iranian crypto miners have limited options now when it’s obvious that the country’s power network can no longer meet their needs. The first is to simply wait until the authorities lift the ban. Another one is to use alternative fuels by installing diesel generators or to rely on generation from renewable energy sources. The last resort is to go underground and continue to mint digital coins illegally, on their own risk.