Iran’s crypto-mining crackdown – Why is the country offering bounties now?

• A major heatwave has worsened the electricity crisis in Iran
• Mining activities have historically allowed the country to mitigate effects of international sanctions

Iran is intensifying its crackdown on illegal cryptocurrency miners amid a severe and unprecedented heatwave that has led to an electricity crisis across the country. The heatwave has significantly strained Iran’s power grid, prompting the state-backed electricity company, Tavanir, to take drastic measures.

In a bid to curb the growing demand for electricity, Tavanir has not only ramped up efforts to locate and shut down illegal mining operations but is also offering a $23 bounty to citizens who report unauthorized miners.

According to one of the firm’s execs,

“Opportunistic individuals have been exploiting subsidized electricity and public networks to mine cryptocurrencies without proper authorization.”

Is crypto mining a way out?

Illegal crypto mining has become a major concern in Iran, with unauthorized operations consuming vast amounts of electricity—equivalent to provincial levels of power consumption. The problem has escalated to the point where over 230,000 illegal mining units were confiscated by authorities recently.

The situation has also drawn international attention, particularly regarding the potential misuse of cryptocurrency mining in Iran.

Back in May, for instance, U.S. Senator Elizabeth Warren raised concerns that Iran might be using crypto mining as a way to evade international sanctions. The country has been under heavy economic sanctions, and cryptocurrency offers a potential avenue to bypass traditional financial systems.

The fear is that Iran could be leveraging its growing crypto mining industry to generate revenue and circumvent economic restrictions imposed by the international community.

A global trend?

The legality of crypto mining in Iran has been a complex issue. While the country officially recognizes and even regulates crypto mining, it has imposed strict controls and requires miners to obtain licenses. However, the lucrative nature of mining, combined with the economic pressures faced by many Iranians, has led to a surge in illegal mining activities.

Iran is not alone in facing this challenge. Other countries such as Kazakhstan and Kosovo have also been clamping down on illegal crypto mining operations due to electricity shortages.

In Kazakhstan, the government has introduced new regulations and penalties for unauthorized mining after the country experienced power outages linked to a surge in crypto mining activities. Similarly, Kosovo imposed a temporary ban on all crypto mining earlier this year to alleviate pressure on its electricity grid.