The recently reintroduced seasonal ban on cryptocurrency mining has sparked a backlash from the local crypto community. This week, the country’s power distribution company ordered miners to suspend activity, citing power shortages in the hot summer.
Critics say restrictions on crypto mining are driving Iran out of global coin minting industry
After crypto miners were repeatedly forced to deal with power outages last year, Iran’s Electricity Generation, Transmission and Distribution Company (Tavanir) told them to cease operations again until the end of this summer. The utility said the hot weather over the next three months is expected to see power shortages, when demand will soar due to increased cooling consumption.
The company’s spokesman, Mostafa Rajabi Mashhadi, was quoted as saying the measure should help reduce the heavy load on the national grid during peak seasons. According to a report by Iranian business news outlet Way2pay, stakeholders opposed the move, insisting it was baseless and would harm Iran’s cryptocurrency mining industry as it will in 2021.
Power shortages and frequent blackouts were partly blamed on increased electricity use for both legal and illegal mining, with licensed miners ordered to shut down last May. They were allowed to resume operations in September, but were then again asked to unplug equipment to help ease shortages in the cold winter as demand for energy for heating increases.
According to the Cambridge Centre for Alternative Finance’s Bitcoin Mining Map, multiple shutdowns last year hit miners hard, with Iran’s share of the global hash rate dropping to just 0.12%, effectively driving Iran out of the planet’s crypto mining industry go out. Now, similar incidents have once again sparked numerous reactions from space and warnings that Iran is lagging behind its rivals.
Iranian miners have few other options to choose from
Some Iranians argue that removing cryptocurrency miners from the equation has little impact on power supply, as legitimate mining facilities account for a relatively small share of the network load. The report notes that it is unclear how effective the ban on authorized mining will ultimately be.
It’s also unclear why all miners across the country should cease their activities, as some crypto farms actually operate in parts of the country without power shortages. Another objection boils down to the question of why only miners should be disconnected from the grid and why this happens 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. Mohammad Khodadadi, Tavanir’s executive in charge of mining, reminded that the government resolution clearly states that miners are not allowed to buy electricity during peak periods. Their contracts contain similar clauses, he added.
According to Way2pay, Iranian crypto miners now have limited options when it is clear that Iran’s electricity network cannot meet their needs. The first is to wait until the authorities lift the ban. The other is to use alternative fuels by installing diesel generators or relying on renewable energy to generate electricity. The last resort is to go underground and continue to illegally mint digital currency at your own risk.
Do you expect Iran to solve the power shortage and ensure normal power supply for its crypto mining industry? Share your thoughts on the topic in the comments section below.
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