A recently reintroduced seasonal ban on cryptocurrency mining has sparked a backlash from the local crypto community. This week, the country’s electricity distribution company ordered miners to halt their activities, citing power shortages during the hot summer months.
Restrictions on crypto mining are banning Iran from the global coin minting industry, critics say
After crypto miners were forced to deal with multiple power supply disruptions last year, Iran Power Generation, Transmission and Distribution Company (Tavanir) has told them to shut down operations again until the end of this summer, after The utility told them to shut down again until the end of this summer. The utility cited the expected power shortages during the hot months of the next three months as the reason for the surge in demand due to increased consumption for cooling.
The company’s spokesman Mostafa Rajabi Mashhadi was quoted as saying that the measure should help reduce the heavy load on the national power grid during peak season. According to a report by Iranian business news outlet Way2pay, stakeholders objected to the move, arguing that it is unjustified and will hurt Iran’s crypto mining industry as of 2021.
Power shortages and frequent blackouts, partially due to increased power usage for both legal and illegal mining, led licensed miners to be ordered to shut down last May; they were allowed to resume operations in September, but the cold winter, which increases energy demand for heating, eliminated the shortage The company was again asked to unplug equipment in order to.
The multiple shutdowns last year hit miners hard, with Iran’s share of the global hashrate falling to just 0.12%, according toIran’s share of the global hashrate fell to just 0.12%, effectively driving Iran out of the global crypto mining industry, according to the Cambridge Center for Alternative Finance’s Bitcoin Mining Map. Now, similar events have again triggered numerous reactions from the space and warnings that Iran is lagging behind its competitors.
Iranian Miners Have Few Options Left
Some Iranians believe that removing cryptocurrency miners from the equation will have little impact on power supply as legal mining facilities account for a relatively small share of network load Some believe it would have no impact. The report notes that it is unclear how much effect a ban on authorized mining would ultimately have.
It is also unclear why all miners across the country are supposed to cease their activities, since in reality crypto farms are operating in areas that are not experiencing power shortages. Another objection comes from the question of why only the miners have to be cut off from the power grid, and why so suddenly?
Iran legalized crypto mining as an industrial activity in 2019. Since then, dozens of companies have applied for licenses from the Ministry of Industry, and Mohammad Khodadadi, director of Tavanir’s mining division, recalled that a government resolution explicitly states that miners are not allowed to purchase electricity during peak consumption periods. Their contracts contain a similar clause, he added.
According to Way2pay, if it is clear that Iran’s electricity network can no longer meet their needs, Iranian crypto miners have limited options: first, they can simply wait until the authorities lift the ban; second, they can buy electricity from the government, but they will not be allowed to do so. The second is to install diesel generators and use alternative fuels or rely on renewable energy to generate electricity. The last resort is to go underground and continue minting digital coins illegally at one’s own risk.
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