Iran outlawed the power-intensive mining of cryptocurrencies for four months ahead of the country's peak electricity demand season, citing widespread blackouts in major cities.
The restriction will run until Sep. 22, President Hassan Rouhani said in a televised speech, adding that about 85% of cryptocurrency mining activity in the country is unregistered.
The US imposes an almost total economic embargo on Iran, including a ban on all Iranian imports and sanctions on Iranian financial institutions. Oil exports have plummeted 70% over the past decade, leaving the country in a deep recession with soaring unemployment and periods of civil unrest.
According to analytics firm Elliptic, Iran has turned to an unlikely solution - Bitcoin mining in the face of these sanctions as the sanctions-hit economy has been suffering from a shortage of hard cash, but with a surplus of oil and natural gas.
Elliptic estimates that 4.5% of all Bitcoin mining takes place in Iran, allowing the country to circumvent trade embargoes and earn hundreds of millions of dollars in crypto-assets that can be used to purchase imports and bypass sanctions.
Rouhani said for cryptocurrency mining, the electricity consumption of up to 300 megawatts is generally permitted. Although this is considered a low rate, he said the current amount is well in excess of this with electricity capacity reaching 2,000 megawatts to create a cryptocurrency.
The frequent power outages in Iran over the last week have sparked widespread outrage, which forced the country’s Energy Minister Reza Ardakanian to apologize. The minister said the outages were caused by a lack of water supplies and the early start of the summer season.
By Sibel Morrow