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Iran bans cryptocurrency mining for 4 months amid power cuts

Iran bans cryptocurrency mining for 4 months amid power cuts

FILE PHOTO: A representation of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken January 8, 2021. REUTERS/Dado Ruvic/File Photo/File Photo

DUBAI: Iran has banned the energy-intensive mining of cryptocurrencies such as Bitcoin for nearly 4 months, President Hassan Rouhani said on Wednesday, as the country faces major power blackouts in many cities.

"The ban on the mining of cryptocurrencies is effective immediately until September 22 ... Some 85per cent of the current mining in Iran is unlicensed," Rouhani said in a televised speech at a cabinet meeting.

Bitcoin and other cryptocurrencies are created through a process known as mining, where powerful computers compete with each other to solve complex mathematical problems. The process is highly energy intensive, often relying on electricity generated by fossil fuels, which Iran is rich in.

As next month's presidential election approaches, the blackouts have been widely criticised by Iranians. The government has blamed the power cuts on cryptocurrency mining, drought and surging electricity demand in summer.

According to blockchain analytics firm Elliptic, around 4.5per cent of all Bitcoin mining takes place in Iran, allowing it to earn hundreds of millions of dollars from cryptocurrencies that can be used to lessen the impact of U.S. sanctions.

Iran's economy has been hit hard since 2018, when former President Donald Trump exited Tehran's 2015 nuclear deal with six powers and reimposed sanctions.

U.S. President Joe Biden's administration and other global powers have been in talks with Iran to revive the deal.

Iran has accepted crypto mining in recent years, offering cheap power and requiring miners to sell their bitcoins to the central bank. Tehran allows cryptocurrencies mined in Iran to be used to pay for imports of authorised goods.

The prospect of cheap power has attracted miners, particularly from China, to Iran. Generating the electricity they use requires the equivalent of around 10 million barrels of crude oil a year, or 4per cent of total Iranian oil exports in 2020, according to Elliptic.

(Writing by Parisa Hafezi; Editing by Giles Elgood)

Source: Reuters

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