Iranian crypto miners cry foul over electricity backlash | Business and Economy News

Tehran, Iran – An Iranian newspaper this week blamed government authorities for allowing cryptocurrency farms – especially those belonging to the Chinese – to mine bitcoin in Iran.

“Burning public trust is even more dangerous than burning people’s money in Chinese cryptocurrency farms,” ​​read Jomhouri-e Eslami’s editorial entitled “Red farms!”

The allegations are not confined to one newspaper. For two weeks, Iranian social media, state-related media, and dozens of local and national officials have weighed in on the topic of crypto farms, their use of electricity and the alleged role that mining plays in harming air quality nation.

But members of the crypto community are crying foul, arguing they get their scapegoat for Iran’s mounting woes as it battles COVID-19’s worst crisis in the Middle East and the financial blow of pandemic and US sanctions .

Power cuts and corruption

Crypto miners run powerful “farms” of competing computer tools within a global decentralized computer network to verify transactions made with cryptocurrencies such as bitcoin.

In return for checking “blocks” of transactions, miners are rewarded with new coins.

The profits can be handsome. Famously volatile, bitcoin always surged to a high value just shy of $ 42,000 on January 8 but has since slumped back to around $ 31,000.

But crypto mining requires a lot of electricity, which is subsidized in Iran, fueling accusations that crypto miners are profiting at the expense of the state.

The latest clash against crypto mining comes as Iran’s invasive capital, Tehran, is covered for the better part of a month in heavy smog [File: Majid Asgaripour/WANA (West Asia News Agency) via Reuters]

Crypto advocates object that those subsidies are not as generous to miners, who are forced to shrink electricity export rates and can pay 10 times what other industries pay for power during the peak months.

The government and the public have also blamed crypto miners for power cuts nationwide since 2019.

This latest backlash comes as Iran’s sprawling capital Tehran – home to more than eight million people, swells to over 12 million when you add in commuters – is covered for the better part of a month in heavy smog has spread to other cities across the country.

The deterioration in air quality has been attributed to mazut burning power plants, a low quality heavy fuel oil that releases high levels of sulfur dioxide.

“We don’t want mazut to be eaten at all, but we have no other option,” admitted Oil Minister Bijan Zanganeh in early January, saying that US sanctions on the country’s oil industry have affected mazut exports Iran.

Inhalation of toxic emissions directly contributes to 3,000 deaths in Tehran and 33,000 throughout Iran each year, according to the health ministry’s latest estimates in 2018.

Over a five-day period in December, nearly 14,000 people across Iran were admitted to emergency rooms because of corruption-related complications, according to Mojtaba Khaledi, a spokesman for the Iranian Institute of Emergency Services.

Iran’s electricity grid is experiencing stress, which experts have for years attributed to a range of fundamental issues, from mismanagement of power plants and old infrastructure leading to energy waste to extremely high levels of natural gas consumption by households .

Earlier this week, President Hassan Rouhani said Iran – which has the second-largest natural gas reserves in the world – consumes more natural gas than 14 European countries in colder climates combined.

Now Tehran homes are experiencing intermittent natural gas cuts as well.

Crypto mining is currently the most cash-strapped industry in Iran.

Hamed Salehi, researcher of cryptocurrency and blockchain technologies

A cash-strapped industry

Iran currently has the capacity to generate up to 83,000 megawatts (MW) of electricity, officials said.

But while many officials have blamed cryptocurrency mining for putting strain on the electricity grid, others have contradicted that assertion.

Iranian Energy Minister Reza Ardakanian said on Tuesday that the country’s electricity consumption peaked at 38,000MW a day while total consumption for cryptocurrency mining was just over 300MW

“A simple mathematical calculation will tell you what fraction of this huge number is,” he told reporters, warning to be wary of factions who wish to use this opportunity to sow unrest.

Cryptocurrency and blockchain technologies researcher Hamed Salehi said the energy ministry’s lack of transparency on large crypto mining farms – including how much energy each uses and the type of equipment they use – is firing misinformation and creates a less than welcoming climate for an industry that is not under the yoke of US sanctions.

“What would be wrong with foreigners coming into Iran, getting all the official licenses, and investing money to even build power substations for their [cryptocurrency mining] farms? “He asked Al Jazeera, adding” It would be a victory for them, the government and the people. “

“Crypto mining is currently the most cash-ready industry in Iran under sanctions and this is while miners are paying for their electricity at export rates,” said Salehi.

While Jomhouri-e Eslami’s editorial is outlawed against “red farms”, there is only one Chinese-owned crypto mining farm in the country, Mostfa Rajabi Mashhadi, a spokesman for the Iranian power industry, told state television last week.

The farm in question is run by Iran & China Investment Development Group. On January 14, Iranian officials announced that – along with several other Iranian crypto farms – it would be allowed to cut power for two weeks without prior notice.

Mohammad Hassan Ranjbar, CEO of the Iran and China Investment Development Group, issued a statement condemning the move and media hype surrounding cryptocurrency mining.

“China is currently the only country that can invest in Iran because of sanctions. It’s rich and technology-rich, so we can create the foundations for more investments by helping each other, ”he wrote, warning that China, considering that bitcoin mining“ could profitable anywhere in the world ”in its recent valuation.

“They don’t even need to build power substations, they are supported by governments and people, and they are not penalized,” added Ranjbar.

China is currently the only country that can invest in Iran due to sanctions.

Mohammad Hassan Ranjbar, CEO of Iran and China Investment Development Group

Crash on illegal mining

The crosshairs are not just crypto farms operating above the table.

President Rouhani’s chief of staff, Mahmoud Vaezi, who previously served a four-year term as minister of information and communications technology, announced earlier this week that the intelligence ministry will begin investigating illegal cryptocurrency mining operations.

“It would also be untrue to say that the government uses bitcorn,” he said, mispronouncing the world’s largest cryptocurrency name.

Mohammad Hassan Motevalizadeh, CEO of the state-run power company Tavanir, said this week that 45,000 illegal mining devices that use 100MW per day have recently been seized.

Illegal devices not captured in the dragnet are estimated to consume up to 300MW per day, or less than one percent of Iran’s peak power consumption.

It would be futile to say that cryptocurrency mining causes power cuts in Iran with all the evidence to the contrary, says a 30-year-old man who operates a legal farm with nearly 1,000 devices and who asked to remain anonymous because of the sensitivity in question.

“The solution to tackling power cuts would be for officials and the energy ministry to develop infrastructures and methods of supplying peak-time electricity,” he told Al Jazeera, adding that the expansion of solar and wind power stations would one promising path.

“I agree that illegal farms should be dealt with,” said researcher Salehi.

“This signals foreigners not to come to Iran because something like this could happen to them every second. And he is wrong in telling the people that crypto mining is for profiteers who waste public resources. ”