Iranian Authorities Seize 1,000 Bitcoin Mining Rigs As Electricity Consumption Surges

  • Iranian authorities have seized 1,000 bitcoin mining rigs in a crackdown on crypto mining. 
  • Energy Ministry spokesperson says bitcoin mining is disrupting the country's electrical grid. 

Iranian authorities have seized nearly 1,000 bitcoin mining rigs from two abandoned facilities, as concern over mounting electricity costs continues to plague the country. 

Iran Cracks Down On Cryptocurrency Mining

According to the report published by RadioFreeEurope, Mostafa Rajabi, a spokesman for the Iranian Energy Ministry, claimed that cryptocurrency mining was having a negative effect on the country’s power grid.

He went on to explain that bitcoin mining was disrupting access to electricity by households and businesses. The government further issued a warning that they would continue the crackdown on mining operations. 

Iran reported an “unusual” 7% spike in electricity consumption last month, which Rajabi attributed to the increase in bitcoin mining pools.

Electricity Costs on the Rise

Individuals mining bitcoin continues to be a problem for energy municipalities around the globe. While the impact of bitcoin mining on the environment is debatable, countries have begun the crackdown on individuals or small mining groups attempting to siphon off the electrical grid.

Most countries subsidize electricity for households and small individual operations. Businesses are forced to pay a higher rate or at-cost rate for electricity, which helps offset the cost. 

However, the massive amount of electricity consumed in mining pools, which can have hundreds or thousands of rigs operating in close proximity, violates the subsidy extended to individual grid users.

According to Rajabi, the power needed to mine one bitcoin equaled the total consumption of electricity by twenty-four Iranian households for an entire year. 

Iran a ‘Hot Spot’ for Bitcoin Mining

RadioFreeEurope points out that Iranian cryptocurrency mining has been on the rise due to relatively low electricity costs. A report published by Chinese outlet 8BTC agreed, stating that Iran was a “hotspot” for Chinese cryptocurrency miners in 2018.

More troubling for Iranian officials is the rise of bitcoin mining pools located in what an energy minister suggested were “schools and mosques.” These locations receive electricity for free.

Some are suggesting the sudden spike in crypto mining is in response to US sanctions being imposed on Iran. In the event of a economic downturn for the country, Iranians are looking to bitcoin and crypto-assets as an alternative to their government fiat. 

Iran itself has floated the idea of a state-controlled cryptocurrency backed by gold called PayMon. 

India’s Finance Minister Says Countries Are 'Rushing' Into Cryptocurrency

  • India's Finance Minister and Reserve Bank Governor cautioned against countries rushing into digital currencies. 
  • IMF Director Kristalina Georgieva said the organization is taking a "balance approach" to regulation.

Reserve Bank of India Governor Shaktikanta Das and Minister of Finance Nirmala Sitharaman cautioned that countries are rushing into cryptoassets, in the wake of Facebook’s handling of libra. 

Das spoke on cryptoassets earlier in the week at the annual meeting for the International Monetary Fund and World Bank. Sitharaman told Indian reporters of the meeting, 

On our side, the Reserve Bank Governor spoke about it during our turn to intervene. I got the sense that many countries were cautioning on rushing into this.

Das continued, explaining how some officials took issue with libra being labeled a ‘stablecoin,’

Some of them [countries] of course even suggested that they shouldn't be using, all of us shouldn't be using the name stable currency because that's the expression they used. Many cautioned to the extent saying even the name should not be stable currency, it should relate to virtual currency or something of the kind.

Sitharaman said the general consensus was that countries need to show “extreme” caution in the handling of digital currencies. However, she also admitted there were discussions about the benefits of digital currencies, saying that "presentations were also highlighting the strenghts of such virtual currency."

IMF Managing Director Kristalina Georgieva said the organization is taking a “very balanced approach” to crypto-assets while being “mindful” of the risks they pose for consumers. 

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