The Iranian government has decided to cut off power to the country’s legitimate crypto mining machines.
According to local news site Arz Digital, Rajabi Mashhadi, a spokesperson for Iran’s Ministry of Energy, announced the day before that the institution would cease power supply to all of the country’s licenced crypto mining firms by the beginning of July. “There are currently 118 approved [digital currency] extraction facilities in the country,” Mashhadi said, noting an expected electricity shortage during the busy summer season.
The action comes after the country’s Ministry of Energy announced a modest growth in energy generation capacity of 1.2 gigawatts (GW) in 2021. This was far less than the 3.5 GW anticipated, resulting in a power shortage. Iran lacks the necessary investment in power generation capacity and natural gas output to fulfil demand due to international sanctions. Demand, on the other hand, is growing as a result of the country’s extremely low electricity prices. Iran’s average home electricity costs $0.005 per kilowatt-hour (kWh), compared to $0.024 in Iraq and $0.159 in the US. The Iranian government spends over $60 billion per year on indirect political subsidies.
Iran accounted for 0.12% of the Bitcoin (BTC) network’s hash rate, according to Cambridge University, and was formerly in the top 10 countries in the world by BTC mining productivity. However, their market share of Bitcoin mining plummeted from 4% in the previous years, owing in part to a severe power crisis in the summer of 2021.