Bitcoin mining, although a very profitable business for mining companies and individuals, can cause many problems. The rise of crypto mining can drive up prices, weaken grids, and even cause power outages in some countries like Thailand, Venezuela, and Kazakhstan. Iran’s capital and surrounding provinces have been reporting blackouts for the past two months, disrupting businesses and the daily lives of local residents.
Although local authorities have floated several underlying factors of the ongoing crisis, they may suspect that crypto mining has played a significant role in it. Tehran’s recent problems with power outages have raised concerns among local officials, calling for an investigation into the activities of crypto miners.
Iran Faces Growing Demand for Energy
Iran has historically struggled with rising energy demands, largely due to international sanctions over its nuclear program. It also didn’t help that his government sold off some of its energy sources to supplement its budget while dealing with regional conflicts and mismanagement. To help deal with anxiety, many Iranians have stopped using their air conditioners as the weather improves in the fall.
The country’s power outages coincided with Bitcoin’s massive price surge in early November. Immediately after the election of Republican Donald Trump, the price of Bitcoin began to rise above $ 70,000, and finally reached the $ 100k mark for the first time in the first week of December.
Some local Iranian authorities suspect that the rise in the price of Bitcoin and attention to crypto developments in the US may have contributed to the power outage in the capital.
Local Residents and Industries Suffer from Power Outages
The increasing strain on the country’s electricity grid has drawn the attention of policymakers. According to Mostafa Rajabi, the CEO of the state-owned power company, some opportunists have used state-sponsored electricity and other resources for crypto mining operations without authorization.
Power outages are common in Iran, reflecting its inability to support growing demand and aging energy equipment at its plants. Last summer, industrial parks near the capital were affected by power outages. Then in October and November, Tehran’s neighborhoods were hit by blackouts.
Iran’s Pezeshkian Calls for Accountability
Faced with frequent power outages, Iranian President Masoud Pezeshkian ordered some plants to stop using mazut, the most polluting fuel favored in the Soviet Union. Iran has approved the use of this oil in the past to deal with electricity shortages. Pezeshkian also agreed that it is time to give the public a fair and transparent assessment of the current situation.
Currently, electricity in this country is heavily subsidized, which has helped spur the growth of crypto mining. These Bitcoin mining centers require huge amounts of energy, which depletes the country’s resources.
According to Masih Alavi, the CEO of Viraminer, it is a challenge for the government to identify how much energy is used by unauthorized mining facilities. He added that these miners use VPNs and rent apartments to hide their rigs from public view. Alavi said these workers spread the rigs throughout many apartments, making it difficult for the authorities to track them.
Featured image from DALL-E, chart from TradingView
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