Why do officials call Iran a "paradise for miners"?
It is reported that Iran's Information and Communication Technology Minister Mohamed Jawad Azari Jahromi called the country "the paradise of miners" AP News.
He said that Iranians had turned to encrypted mining as a response to hyperinflation and economic collapse after the economic sanctions against Washington, D.C. However, he also pointed out that although Bitcoin mining was not illegal in China, the government wanted to restrict the import of mining equipment until comprehensive regulations were introduced.
Jahromi explained: "The law does not prohibit the 'mining' business, but the government and the Central Bank have ordered the Customs Bureau to ban imports (mining machines) until new regulations are introduced."
Bitcoin mining and energy consumption in Iran
Bitcoin mining is an energy intensive activity. When the cost of obtaining collective rewards is lower than the cost of operating machines, miners can make money. For most miners, electricity accounts for a large part of indirect costs. China was once a paradise for miners, but increasing regulation led to a large outflow of asylum seeking miners to redeem in Iran. The Gulf state provides cheap energy that is attractive to overseas miners.
The Iranians paid as low as 0.06 dollars per kilowatt hour, which is far from the 0.20 dollars per kilowatt hour paid by most developed countries. In addition to the low electricity cost of families, industries and public utilities, religious centers like mosques enjoy subsidized energy.
Some government officials, such as Mustafa Rajabi Mashhadi, spokesman of the Ministry of Energy, believe that the booming mining industry is the reason for the country's recent surge in electricity consumption. The country's energy grid has grown by 7 per cent in recent years.
Mashhadi's statement, if anything different, shows that the government has so far retreated from its position of accepting the mining industry last year. At that time, Abolhassan Firoozabadi, Secretary of Iran's Supreme Cyberspace Commission, described clandestine mining as an acceptable industry in the country.
"The high consumption of cryptocurrency miners has led to the instability of some power supply and even caused damage to other power users," Mashhadi explained. "If this trend continues, those users who are found to be using electricity without authorization will face legal proceedings."
Although the government remains divided on how best to manage the industry, recent attacks on miners, including confiscation, will not stop bitcoin miners. This is evident from the fact that a large number of miners have opened stores in mosques to avoid energy costs. Because of its isolation from SWIFT and other global banking systems, Iran cannot afford to be isolated from crypto.
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