Iran Moves to Authorize Cryptocurrency Mining With New Pricing Scheme

Samuel Haig

According to a Financial Tribune report that was published on July 21, Iran proposed a new pricing scheme for cryptocurrency miners, which will be based on comparable tariffs in place for electricity imports.

The announcement was made on Sunday by Homayoon Ha’eri, Iran’s Energy Ministry deputy for power and electricity, who noted that the scheme is still awaiting final approval from the Iranian cabinet. Ha’eri did not reveal the price scheme, however, indicated that market factors including energy prices would drive pricing.

Iran Expected to Embrace Cryptocurrency Mining

On July 10, the governor of the Central Bank of Iran (CBI), Abdol Nasser Hemmati announced the Iranian administration is preparing to authorize cryptocurrency mining, despite the lack of an existing regulatory apparatus legitimizing the activity in Iranian law.

Hemmati indicated that the government had approved aspects of an executive law that would permit cryptocurrency mining, following an increase in the prevalence of mining owing to cheap electricity prices.

The CBI governor specified that the pricing scheme for electricity provided to miners “should be done based on the price of electricity for export,” adding: “what’s more important is that these mined currencies should be fed back to the national economic cycle.”

Iran currently exports electricity to neighboring countries for roughly between $0.07 and $0.10 per kilowatt-hour, however, industrial and agricultural operations receive subsidized electricity at approximately $0.05 per kilowatt-hour.

On July 9, reports indicated that Iran’s Energy Ministry had proposed a rate of $0.07 for each kilowatt-hour consumed by cryptocurrency miners.

Cheap Electricity Attracts Cryptocurrency Mining Operations to Iran

Cheap electricity has reportedly attracted miners to Iran since at least December 2018, with various news outlets highlighting the increasing presence of Chinese miners in the country. The story quoted a statement from a Chengdu-based start-up that it had deployed 2,000 mining units to Iran.

On July 6, Iran’s Minister for Communications and Information Technology, Mohammad Javad Azari Jahromi, relayed rumors of private Chinese mining operations having a presence in Iran, stating

There is no evidence of the activity the Chinese in Iran although I have heard it unofficially.

During June, Iran’s power generation and distribution company, Tavanir, reported that the country’s electricity consumption between May 22 and June 21 had increased by 7% compared to the same period during the previous year. A spokesperson for Iran’s Ministry of Energy attributed the bulk of the “unusual increase” to “the activity of bitcoin miners.”

The spokesperson, Mostafa Rajabi Mashhadi, estimated that the power required to mine a single bitcoin could supply two dozen residential units for an entire year. Mr. Mashadi warned that authorities would crackdown on the unsanctioned usage of electricity for cryptocurrency mining, stating that “bitcoin miners will be identified and their electricity will be cut.”

In late June, Iranian state television reported that two mining farms located in abandoned factories had been shut down, resulting in the seizure of approximately 1,000 mining rigs.