Gate.io Blog Iran Shuts Down Almost 7,000 Illegal Crypto Mining Operations

Iran Shuts Down Almost 7,000 Illegal Crypto Mining Operations

01 July 13:48

[TL; DR]

Illegal crypto-mining activities are growing exponentially in Iran.

The middle east nation is putting measures and policies in place to clamp down and punish illegal crypto miners.

The government discovered that a substantial part of crypto transactions in Iran are used for terrorism financing and money laundering.

The government placed a total ban on crypto transactions in 2018, and in 2019, the government relaxed the ban.

Since 2019, Iran has shut down about 6,914 illegal crypto facilities because they have invalid licenses.

Iranian government introduced a mining license that requires miners to have a valid license, valid identity, and higher electricity tariff plans.

Illegal miners in Iran who are caught are liable to a monetary fine or jail term.

The impact of the illegal mining activity is enormous and has continued to cause ongoing power outages in Iran.

Keywords: Iran, Crypto, Mining, Facilities, operations, clampdown, shut down, government.

[Full Article]

The rising cases of illegal crypto mining activities cuts across the world. One of those countries is taking active steps to clamp down and curtail the excesses of illegal crypto miners in Iran.

Crypto mining activities are energy-intensive, which is why these miners operate illegal mining facilities. Albeit, their illegal activities hurt the environment and cause an energy crisis.

In this article, we shall examine how the crypto ecosystem is faring in Iran and the latest exploits by the Iran Government to clamp down on Illegal Crypto Mining Operations in the country.

Let’s begin!

Cryptocurrency In Iran

Image: VOI.id

Iran is an Islamic country and one of the foremost middle east nations, and the country is synonymous with crude oil and terrorism activities.

In 2018, the government discovered that crypto tokens were largely used for terrorism financing and money laundering. In a bid to check these excesses, the Iranian government placed a ban on the trading and possession of cryptocurrency.

Similarly, all financial institutions in Iran, such as banks, credit institutions, currency exchanges, etc., were instructed to halt crypto transactions and all related activities.

In 2019, after about a year of banning crypto transactions, the government began to ease the ban as sanctions were affecting the local currency.

While the Iranian government lifted the ban and allowed you to possess and mine cryptocurrencies, there was still a ban on using crypto for payment services. The ban also limited Iranians from having large amounts of crypto tokens the same way you can not hold more than 10 000 Euros.

Let's look at the events surrounding this shutdown of illegal mining facilities.

Iranian Authority Shuts Down Illegal Mining Facilities

Image: Blockchain Journal

Since 2019 when Iran legalized crypto mining, the Iranian Authorities have shut down about 6,914 illegal crypto facilities. These crypto farms are operating without a valid license.

Being one of the first Countries to approve crypto mining as an industrial activity, the Middle East nation has since 2019 established a licensing regime. This regime mandates crypto miners to have a valid license and identity, pay a higher tariff than others on energy consumption and sell their mined crypto tokens to the government.

Some of these miners consider these licensing terms as stringent and decide to conduct their operations illegally and without Government awareness.

In an evaluation conducted by the Management of the National Power Grid in Iran, the illegal crypto mining operations account for the highest consumers of Iran’s energy supply. Similarly, the Iranian news published that these illegal crypto farms consume about 645 megawatts of power while conducting their operations without licenses.

Iran’s Power Generation, Distribution, and Transmission Company (Tavanir) highlighted the enormity of these illegal activities; the power consumption equals that of three regions in Iran, namely North Khorasan, South Khorasan, and Chaharmal-Bakhtiari.

Past Clamp Downs On Illegal Mining Operations In Iran

Illegal mining operations are lucrative and thriving in Iran. According to the Daily Financial Tribune and ISNA news, the Iranian Authority has seized about 216,758 mining hardware units. These illegal mining operations have consumed enough electricity to power 800,000 households or two million people.

Similarly, the Power distribution company claimed that illegal mining activities consume about 2,000 megawatts of electricity daily.

Efforts To Curtail Illegal Mining Operations

Image: Verdict

The Tehran Authorities introduced licensing for mining companies. The mining license comes with a permit issued by the Ministry of Industries.

In May 2021, the Government of Iran imposed a temporary ban on all cryptocurrency mining operations. The ban was necessary to reduce the country’s power deficit, and in August, it was announced that the restrictions would be removed for licensed miners.

It was expected that by September 2022, the ban would be lifted because of an expected decline in power demand towards the end of that season.

According to the Iran authority, illegal miners will have to pay a huge fine to compensate for the damages they might have caused to the electrical connections. The regulation gives room for a monetary penalty and jail time depending on the enormity of the illegal activity.

The fine for illegal crypto miners is between three to five times higher than the regular electricity charge. In some cases, the business license of the illegal mining facility operators can be revoked.

The country has also raised the electricity tariff four times higher than it used for crypto miners. Having taken effect from April, miners pay 16,574 Rials, equivalent to $0.39 per kilowatt-hour.

Conclusion

The Government of Iran is facing serious energy issues and constant breakdown of power supply due to the increasing activities of illegal crypto miners.

As of Mid 2022, Iran has successfully clamped down hundreds of illegal miners and shut down about 7,000 illegal mining facilities.

Even though the government keeps reviewing the sanctions and making them more stringent, the illegal miners keep multiplying. Experts, however, suggest that the Iranian government should lessen the conditions required of miners to ensure a high level of compliance.

Author: Valentine. A, Gate.io Researcher

This article represents only the researcher's views and does not constitute investment suggestions.

Gate.io reserves all rights to this article. Reposting of the article will be permitted, provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.

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Iran Shuts Down Almost 7,000 Illegal Crypto Mining Operations

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