The recently reintroduced seasonal ban on cryptocurrency mining has sparked a negative reaction from the local cryptocurrency community. This week, the country’s power distribution company ordered miners to suspend operations, citing power shortages during the hot summer months.
Critics say restrictions on cryptocurrency mining are pushing Iran out of the global coinage industry
After cryptominers faced repeated power outages last year, the Iranian Electricity Generation, Transmission and Distribution Company has ordered them to suspend operations again until the end of this summer. The utility is citing expected power shortages during the next three months of hot weather, when demand will rise sharply due to increased consumption for cooling.
Company spokesman Mostafa Rajabi Mashhadi said the measure should help reduce the heavy load on the national grid during the peak season. According to a report by Iranian business news outlet Way2pay, stakeholders objected to the move, insisting that it was unreasonable and would hurt Iran’s crypto-mining industry as it did in 2021.
Power shortages and frequent blackouts were partly due to increased energy consumption for mining, both legal and illegal, and licensed miners were ordered to shut down last May. They were allowed to resume operations in September, but were then asked to shut down their equipment again to reduce energy shortages during the cold winter months, when the need for energy for heating increases.
According to the Cambridge Center for Alternative Finance’s Bitcoin mining map, numerous shutdowns last year hit miners hard, and Iran’s share of the global hash tray fell to just 0.12%, effectively pushing Iran out of the global cryptocurrency mining industry. Such events have now again prompted numerous reactions from the space and warnings about Iran falling behind its competitors.
Iranian miners are left with few options to choose from
Some Iranians believe that removing cryptocurrency miners from the equation will have little effect on the power supply, as legal mining capacity accounts for a relatively small share of the network’s load. The report notes that it is unclear how effective a ban on sanctioned mining would ultimately be.
It’s also unclear why all miners across the country should stop their operations, as in fact some crypto farms are operating in parts of the country that are not experiencing power shortages. Another objection boils down to questions of why only miners should be unplugged and why it should happen so suddenly.
Iran legalized cryptocurrency mining as an industrial activity in 2019. Since then, dozens of companies have applied for a license from the Ministry of Industry. Tavanir’s head of mining, Mohammad Khodadadi, recalled that the government decree explicitly states that miners are not allowed to buy electricity during peak consumption hours. Their contracts also have a similar clause, he added.
According to Way2pay, Iranian crypto-miners now have limited options when it is obvious that the country’s power grid can no longer meet their needs. The first is to simply wait for the authorities to lift the ban. The other is to use alternative fuels by installing diesel generators or to rely on generation from renewable energy sources. The last remedy is to go underground and continue minting digital coins illegally, at your own risk.