The crackdown by the authorities in Iran against unauthorized crypto mining is ongoing, as electricity demand continues to remain high. The total number of illegal mining activities that have been shut down so far by the power utility company in the country is around 5,300 and they have seized a massive amount of machines meant to mint coins. The priority for Iran is to prevent blackouts, as the country’s electricity consumption still remains higher than usual. The majority of cryptocurrency miners in Iran are operating without authorization and they were said to be behind the electricity shortages in the country throughout the summer.
This year, the hot weather resulted in increased use of air conditioning, whereas the hydropower generation was negatively affected due to limited nightfall. Tavanir, which is the Iran Power Generation, Distribution and Transmission Company, in the country is constantly on the hunt for illegal mining operations. The utility published a recent report, which showed that the state-run entity had shut down a total of 5,380 crypto farms in the country. It was also disclosed by Tavanir that they had seized around 216,758 pieces of mining hardware. The estimates indicate that the combined electricity consumption of the unlicensed facilities was equal to the consumption of 2 million people, or around 800,000 households.
Previously, the power distribution company had claimed that 2,000 megawatts of electrical energy is consumed by illegal miners daily. However, the Ministry of Industries, Mining and Trade recently rejected this figure and called it ‘highly exaggerated’ because this amount of power would be consumed by 3 million mining machines. Crypto mining had been recognized as a legal industrial activity by the Iranian government in July, 2019. Licensing for mining companies had been introduced by authorities in Tehran and the Ministry of Industries issues these permits. As per Tavanir, 400 megawatts of electricity are needed by authorized crypto mining farms, which are 56 in total.
This year in May, a temporary ban was imposed by Iran on all crypto mining for reducing their power deficit. In August, Tavanir had announced that restrictions would be removed on September 22nd for licensed miners because of an expected decline in power demand near the end of the summer season. While dozens of mining entities have been able to operate legally due to the licensing regime in the Islamic Republic, the government has had to increase their electricity rates for matching the export prices. Authorized miners have been charged around 16,574 rials, which is the equivalent of $0.39, for every kilowatt-hour.
This is four times what the initial tariff had been. Simultaneously, illegal crypto farms are using subsidized energy that’s meant for households and industrial sectors. Approximately 60,000 megawatts of electrical energy is produced by Iranian power generating facilities from their total installed capacity of around 85,000 megawatts. Tavanir said that the power deficit of the country is around 5,000 megawatts in a day and it is the illegal crypto mining activities that are leading to this shortage because of their excessive consumption of electricity.