The Iranian government announced a temporary ban on mining Bitcoin and other cryptocurrencies on Wednesday (26/5/2021). The reason, officials called the activity “wasteful” of energy and led to blackouts in several cities in Iran.
“The ban is effective immediately and will be in effect until September 22,” President Hassan Rouhani told state TV, in the latest sign of high-profile rejection of the popular digital currency.
Read: Compact against Xi Jinping, Here’s the Tactics of Crypto Traders in China The
capital of Iran, Tehran, and several other major cities have faced several daily power outages over the past few months. Officials have blamed it on shortages of natural gas and a prolonged drought that has crippled hydroelectric power in the country.
Crypto mining adds to the problem. What’s more, 85% of Bitcoin mining in the country is done illegally.
Bitcoin Mining Disrupts Medical Facilities
This prompted a nationwide crackdown on miners as the activity ended up disrupting several medical facilities. This makes it difficult for health facilities to run refrigerators to store Covid-19 vaccines.
In January, Iranian police confiscated nearly 50,000 Bitcoin mining machines that used subsidized electricity illegally. According to state-owned electricity company Tavanir, the miners consume 95 megawatts per hour at a low rate subsidized by the state.
The cryptocurrency, which once hit record high prices in April of over US $ 63,000 (Rp. 900 million) per coin, has come under fire lately for the energy-intensive production behind its production and consequently environmental costs.
Bitcoin miners use specially made computers to solve complex mathematical equations that effectively enable crypto transactions. However, this whole process takes a lot of energy due to the amount of power used by the computer.
Tehran previously allowed cryptocurrencies mined in Iran to pay for imports of goods, which could help it overcome broad US sanctions. Iran’s central bank prohibits trading in cryptocurrencies that are mined abroad, although these can be found on the black market, according to Iranians living in the country.
About 4.5% of all Bitcoin mining globally took place in Iran between January and April this year, according to blockchain analytics firm Elliptic. That places it among the top 10 in the world, while China is in first place with almost 70%.
Previously, Xi Jinping’s government in China claimed to be making tougher rules to protect the financial system. Even miners and trading behavior will be cracked down.
The government of US President Joe Biden has also been tough on illegal Bitcoin miners. The US Treasury Department said it would request reports on crypto transfers with a nominal value of more than US $ 10 thousand, like cash transactions.