The Islamic Republic of Iran has authorized cryptocurrency mining as a legitimate industrial activity.
Entities and individuals engaged in cryptocurrency mining are now required to apply for licensing from the country’s Ministry of Industry, Mine, and Trade. The announcement was made following a cabinet session on July 28 that was chaired by Iran’s president, Hassan Rouhani.
Crypto Payments Still Prohibited
Despite the permissive stance regarding cryptocurrency mining, the Iranian administration restated that virtual currencies are prohibited from being used in domestic transactions.
According to Mehr News, a Tehran-based media outlet that is owned by the Islamic Ideology Dissemination Organization, the cabinet also asserted that virtual currency users must accept the risks associated with crypto and that “the government and banking system will not provide any guarantees for them.”
The publication also claims that analysts are anticipating the Iranian regime to take further steps toward embracing cryptocurrencies to evade sanctions imposed on the country by the United States and its allies, with it reported that an official from Iran’s Chamber of Commerce, Industries, Mines, and Agriculture had indicated that Iran will soon launch a gold-backed virtual currency earlier this month.
Mined Cryptocurrencies That are Exported Will be Exempt From Taxation
Cryptocurrency miners will be taxed the same as other entities engaged in industrial activities. In Iran, however, crypto mining is exempt from taxation in instances where cryptocurrencies and exported and thus bring wealth into the country.
While the pricing structure for electricity consumed by cryptocurrency mining still has not established, recent reports have indicated that the Iranian Energy Ministry has proposed a rate $0.07 per kilowatt-hour – the same price charged for electricity exports. Currently, cryptocurrency miners are able to access subsidized electricity at the price of roughly $0.02 per kilowatt-hour.
The governor of the Central Bank of Iran, Abdol Nasser Hemmati, has expressed his support for the proposed price structure, and emphasized the importance of feeding “these mined currencies […] back [in]to the national economic cycle.”
The legitimation of cryptocurrency mining activities within Iran comprises a complete reversal of the country’s policy regarding virtual currency mining in less than two months.
During June, two mining farms identified to be operating in abandoned factories were shut down, resulting in the seizure of roughly 1,000 mining rigs. The news followed a report from Iran’s power provider, Tavanir, indicating a 7 percent year-over-year increase in electricity consumption during June. The surge in electricity consumption was attributed to an “unusual increase” in “the activity of bitcoin miners.”