As power outages and police raids rock Iran’s Bitcoin mining industry, a match between an unlicensed currency and an inflation-strangled country that once seemed like a perfect fit is now in question.
As Cointelegraph previously reported, Iran is joining Pakistan as a cryptocurrency superpower in the Middle East, in part due to cheap and heavily subsidized electricity prices, as well as an increase of activity following the approval of Bitcoin mining as an “industrial activity” for power plants in 2020. It is estimated that there are well over 1000 legal entities currently engaged in mining activities.
However, the short history of cryptocurrency mining in the country has not always been rosy. Authorities have decided to shut down at least a thousand illegal farms in recent months, and Bitcoin spot prices have at times been misjudged against the rest of the world due to high demand as investors shun the rial who swells rapidly.
Today, another source of friction has emerged as the country is plunged into frequent power cuts in major population centers.
On January 16, several media reported that Iran had suffered power cuts across most of the country. Reports on social media indicated that electricity was spotty before and after the 16th blackout, however, with many cities power outages throughout the past two weeks.
Authorities were quick to blame Bitcoin mining for the blackouts and publicized police raids on illegal mining operations, but some experts believe the government is simply looking for excuses for a long-decaying power grid.
In an interview with The Associated Press on Thursday, former deputy head of Iran’s environment department Kaveh Madani said Bitcoin was an “easy victim” and that “decades” of administrative mismanagement are a cause. more likely.
Additionally, while retail mining may currently act as a scapegoat for the government, it is clear that the authorities are not completely turning their backs on cryptocurrency. As recently as last month, Bitcoin was used to facilitate import payments from Venezuela.
While the relationship may be difficult at the moment, it certainly doesn’t seem like the end of Bitcoin in Iran.