Iran’s Cryptocurrency Mining: An Overview

Iran has turned to cryptocurrency mining and trading since 2019, due to the devaluation of its local currency from years of harsh international sanctions and high inflation. However, experts find it challenging to accurately estimate how much Bitcoin (BTC) the country has mined.

According to data from the University of Cambridge’s Centre for Alternative Finance in March 2021, Iran accounted for 7.5% of the global Bitcoin mining hashrate, which fell to just 0.12% by January 2022.

Andrew Scott Easton, CEO of Bitcoin mining investment firm Masterminded, estimates that Iran has historically mined around 60,000 BTC, worth about $6.4 billion at current prices. Conversely, Sazmining CEO Kent Halliburton believes Iran may have mined between 100,000 and 200,000 BTC since 2018, which could range from $10.7 billion to $21.4 billion. The period is significant as Iran began granting legal permits for crypto mining in 2019.

Forecasts are complicated by the fact that much of Iran’s mining has gone underground to evade high electricity tariffs, according to Rajat Ahlawat of regulatory firm Crystal Intelligence.

The National Council of Resistance of Iran reported that around 1,000 legal crypto mining farm licenses were issued in 2020, and the number exceeded 10,000 in 2022. However, former President Hassan Rouhani noted that 85% of mining was unlicensed as of 2021. Data from state electricity company Tavanir indicates about 700,000 illegal mining devices operate in the country.

Ahlawat stated that licensed miners struggle to make significant profits due to high electricity tariffs, leading many to mine illegally in homes, mosques, and schools, where electricity is cheaper or free. It’s also reported that some government-affiliated organizations participate in this illicit mining.

Illegal mining strains the power grid, causing outages. Tavanir has introduced rewards for reporting illegal mining activities. In 2022, 9,404 illegal mining devices were seized in Tehran within six months.

Bitcoin’s hashrate saw a 27.9% drop following the US bombing of Iran’s Fordow nuclear facility. This incident fueled speculation that Iran was mining Bitcoin underground there. However, mining firms like Blocksbridge Consulting disputed this, stating that short-term hashrate changes can be misleading.

Ahlawat noted no definitive evidence of mining at Fordow exists, although the site has adequate electrical infrastructure. If there were operations, they would likely be run by the Iranian government or its affiliates.

The Iranian Revolutionary Guard Corps (IRGC) is regarded as the largest mining force in Iran, with Easton suggesting it may be the biggest Bitcoin miner in the country. The government’s history of concealing its mining activities makes obtaining accurate data difficult.

Consequently, the extent of Bitcoin mining in Iran remains unclear, primarily because about 85% of activities are unreported and underground. Nonetheless, crypto mining provides a crucial livelihood for many Iranians amidst ongoing high inflation.

> This is not investment advice.