Iran has banned cryptocurrency mining for four months because heavy mining has caused power outages across the country.
In recent weeks, businesses and homes across Iran have experienced blackouts of up to six hours a day. Rounding out blackouts caused Iranian chess players to play their game in an online Asian championship.
“Everyone has found a corner in mining bitcoin and cryptocurrency,” President Hassan Rouhani said Wednesday. Anyone who does this from now on is doing illegal work even those who are allowed to [to mine bitcoins] no longer allowed until we get rid of this problem [of power cuts]. ”
Iran’s economy has been hit by Donald Trump’s decision to unilaterally pull the U.S. from the nuclear deal Tehran has signed with world powers and impose sanctions. Demand for digital currency in Iran has risen in recent months as people seek to solidify their savings against the annual inflation rate of 46.9 percent, a declining stock market and nothing ‘ y paid house price.
Rouhani on Wednesday ordered the ministries of industries, telecommunication, energy and security to clamp cryptocurrencies. He said electricity consumption increased by 20 percent last year, though he did not clarify how much the cryptocurrency caused. This is the second time Iran has sought to curb digital currencies.
Cryptocurrency mining has been taken over by Iran in part because of the availability of the most highly distributed electricity for what is an industry with energy. Imports could, in theory, be paid for in bitcoins. But U.S. sanctions prohibit any banking transactions in Iran and blockchain technology records transaction details, making it difficult for Iranian traders to use cryptocurrency to avoid penalties.
“We have not been able to make connections to reliable digital currency exchanges due to penalties and little experience,” said a trader close to the regime.
In 2018, the U.S. Treasury department identified two digital currency addresses and it was joined by two Iranian -based people who helped help exchange bitcoin ransom payments in Iranian rials. The Treasury has vowed to “aggressively take Iran and other rogue regimes trying to take advantage of digital currencies”.
Despite this, foreign investors, including China, are investing in cryptocurrency mining in Iran. A Chinese -run operation in Rafsanjan, southern Iran, is estimated to be the largest in the country.
Polish, Indian and Turkish companies have also received permission to mine bitcoin in Iran, Majid-Reza Hariri, head of the Iran-China Chamber of Commerce, told local news agencies on Tuesday.
Analysts are divided on whether bitcoin mining is the cause of the power outage. Bitcoin mining, including illegal operations, accounts for at least 10 percent of the country’s electricity generation. They also now blame the severe thirst for the lack of electricity.
It is also unclear how quickly the bans will be enforced. Last week, the energy ministry tried to stop an operation but was met with gunshots.
Meanwhile, demand remains high. “My friend sold his apartment last year and bought bitcoins that increased his money over a year. I think I should also take the risk,” said Anousheh, a 35-year-old employee of a publishing company.