© Bloomberg. Network cables connect mining rigs to servers at the CryptoUniverse cryptocurrency mining farm in Nadvoitsy, Russia, on Thursday, March 18, 2021. The rise of Bitcoin and other cryptocurrencies has prompted the greatest push yet among central banks to develop their own digital currencies. Photographer: Andrey Rudakov/Bloomberg
Iran banned the mining of cryptocurrencies like after a series of blackouts across major cities, in the latest sign of growing unease over the digital asset’s energy usage.
The ban is effective immediately and will last until Sept. 22, President Hassan Rouhani said on state TV on Wednesday.
It follows a regional ban within top Bitcoin miner China, and electric car-maker Tesla (NASDAQ:) Inc.’s decision to stop selling cars using the token. Both cited environmental concerns, triggering a drop in Bitcoin’s value from April’s record high.
Iranian officials blame a surge in mining — as well as increased manufacturing and a drop in hydroelectricity supply — for blackouts that are playing havoc with businesses and daily life.
Drought and Crypto Mining Fuel Iran’s Business-Choking Blackouts
The government has been cracking down on the 85% of mining that is unlicensed, even enlisting spies to locate miners who hide computers everywhere from homes to mosques. Subsidized power prices allow miners to run the complex computers that compete to solve mathematical problems and receive Bitcoin as a reward.
The University of Cambridge estimates Iran was home to 3.4% of Bitcoin mining in the first four months of 2020, putting it in sixth place globally, with China far in front at 69.3%. Another estimate by analytics company Elliptic puts the Islamic Republic’s share at more than a percentage point higher.
Iran is negotiating with the U.S. and other world powers to revive the 2015 nuclear deal, which would ease sanctions and allow foreign companies to provide much-needed infrastructure investment in its power grid.
(Updates with background on China’s mining ban and research estimate.)
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