Government blames Bitcoin mining

Frequent blackouts in Iran: government blames Bitcoin mining

Iranian officials blame Bitcoin mining for the frequent blackouts that have been plaguing the country for some time now. Blackouts and Bitcoin Evolution police searches are shaking up Iran’s fledgling Bitcoin mining industry as the seemingly perfect match between a permissionless currency and an inflation-choked country comes under question.

Iran, following in the footsteps of Pakistan, has become one of the Middle East’s crypto superpowers, thanks to both low and heavily subsidised electricity prices and the approval of Bitcoin mining as an ‘industrial activity’ for power plants. It has been estimated that there are over 1,000 companies currently engaged in mining.

However, the short history of crypto mining in Iran does not inspire optimism

In recent months, authorities have shut down at least a thousand illegal farms. Moreover, Bitcoin spot prices tend to be higher than in the rest of the world due to high demand from investors, who are looking for a way to escape from the national currency, the rial, which is facing a dangerous inflationary spiral.

Recently, however, another issue has emerged: the country’s major population centres are experiencing frequent power cuts. On 16 January, various sources reported that such events had occurred in large parts of Iran.

The authorities have wasted no time in blaming Bitcoin mining for the blackouts, and have made public police raids on illegal mining farms, but some experts believe that the government is simply looking for excuses for an antiquated electrical grid.

In an interview with the Associated Press on Thursday, former vice president of Iran’s Department of the Environment Kaveh Madani explained that Bitcoin is an “easy target”, and that “decades” of administrative mismanagement are a more likely cause for blackouts.

Moreover, although the government has an easy time blaming retail mining, it is clear that the authorities are not completely turning their backs on cryptocurrencies. In fact, last month Bitcoin was used to facilitate payments for some imports from Venezuela.

Although the relationship between crypto and Iran seems to be rather complex at the moment, it is certain that Bitcoin will continue to have a major impact on the Asian country.