Iran banned all cryptocurrency mining for the next four months as widespread power outages stir public dissatisfaction across the country.
President Hassan Rouhani said that all crypto mining operations in Iran, including legal ones must shut down until the end of the sixth Iranian calendar month on September 22.
“Now everybody has a few miners laying around and are producing Bitcoins,” he told a televised cabinet meeting with a chuckle.
Cryptocurrency mining is the process in which banks of powerful energy-hogging computers known as “rigs” race to verify transactions in exchange for new tokens. The practice can be highly lucrative. But in Iran and other countries, the impact on power grids and the carbon footprint of Bitcoin mining, in particular, has elicited a strong backlash.
Rouhani said legal crypto mining operations in Iran consume about 300MW of electricity, which is very insignificant. But illegal operations consume up to 2,000MW.
Thousands of illegal mining rigs have been confiscated in the past few years, according to officials. The government has recently called on its intelligence ministry to crack down on illegal miners while a prize of $900 is also being considered for whistle-blowers who help identify illegal operations.
Provinces across the country, especially the capital Tehran, have been battling sporadic power outages that have frustrated many citizens. Social media are filled with images of how surgery rooms, businesses and homes have been impacted by unannounced power cuts that can strike several times a day.
The president said the main reason behind the outages is unusually low rainfall that has impacted hydroelectricity production. But many observers say mismanagement of the country’s decrepit and under-resourced electricity grid is primarily to blame.
Around 4.5 percent of all global Bitcoin mining takes place in Iran, yielding up to $1 billion worth of revenue, money that can be used to lessen the impact of harsh United States sanctions.