Tehran, Iran – An Iranian newspaper this week embarrassed government authorities for allowing cryptocurrency farms – especially those associated with the Chinese – to mine bitcoin in Iran.
“Burning away public trust is even more dangerous than burning people’s money in Chinese cryptocurrency farms,” Jomhouri-e Eslami editorial read with the title “Red Farms!”
The allegations are not limited to a single newspaper. For two weeks, Iranian social media, state-affiliated media, and dozens of local and national officials have highlighted the topic of crypto farms, their electricity consumption and the alleged role that mining plays. in damaging the air quality of the country.
But members of the crypto community are mourning the deception, arguing that they are being scrambled for Iran’s climbing lanes as it fights the worst COVID-19 crisis in the Middle East and the terrible financial blow of economic sanctions. USA and the United States.
Power outages and pollution
Crypto miners run powerful “farms” of computer gear that compete within a global automated computer network to validate transactions made with cryptocurrencies such as bitcoin.
In exchange for proving “blocks” of transactions, miners receive rewards with new coins.
The profits can be impressive. Notably volatile, bitcoin rose to a full-time high value just shy of $ 42,000 on January 8 but has since fallen back to around $ 31,000.
But crypto mining needs a lot of electricity, which is subsidized in Iran, fueling allegations that crypto miners are taking advantage at the expense of the state.
The latest backlash against crypto mining comes as Iran’s sprawling capital, Tehran, is covered for the better part of a month in heavy smog [File: Majid Asgaripour/WANA (West Asia News Agency) via Reuters]
Crypto claims that these subsidies are less generous to miners, who are forced to cut export rates for electricity and who could pay 10 times what other businesses do. pay for power in the peak months.
The government and the public have also blamed crypto miners for power outages across the country from 2019.
This latest backlash comes as Iran’s sprawling capital of Tehran – home to more than eight million people – goes up to more than 12 million when you send travelers to in – covered for the best part of a month in heavy smog that has spread to other cities across the country.
The decline in air quality is due to mazut-burning power engines, a low-quality heavy fuel oil that emits high levels of sulfur dioxide.
“We do not want mazut to be consumed at all, but we have no choice,” Oil Minister Bijan Zanganeh admitted in early January, adding that U.S. sanctions have affected mazut exports. Iran on the country’s oil industry.
Breathing toxic emissions directly contribute to 3,000 deaths in Tehran and 33,000 across Iran each year, according to the latest estimates of the health ministry in 2018.
Over five days in December, nearly 14,000 people across Iran were treated to emergency rooms as a result of pollution-related problems, according to Mojtaba Khaledi, considered for Iran’s Emergency Services Group.
Iran’s electricity grid is under pressure, which experts over the years have addressed on a number of fundamental issues, from mismanagement of power stations and old infrastructure leading to energy waste to extremely high consumption rates of natural gas by banks.
Earlier this week, President Hassan Rouhani said that Iran – which has the second largest natural gas reserve in the world – is consuming more natural gas than 14 European countries in colder climates together.
Now Tehran households suffer from occasional natural gas pressure as well.
Crypto mining is currently the most cash-strapped industry in Iran.
Business ready for money
Iran currently has the capacity to produce up to 83,000 megawatts (MW) of electricity, officials say.
But while several officials have blamed cryptocurrency mining for putting pressure on the electricity grid, others have opposed that claim.
Iran’s Energy Minister Reza Ardakanian said on Tuesday that the country’s electricity consumption is rising at 38,000MW per day while total consumption for cryptocurrency mining stands at just over 300MW
“Simple mathematical calculations will tell you what proportion of this large number is,” he told reporters, warning caution about fashionistas who want to use this opportunity to provoke confusion.
Cryptocurrency and blockchain technologies researcher Hamed Salehi said the lack of transparency by the energy ministry on crypto mining farms is huge – given the amount of energy each uses and the type of equipment they use. consumption – fueling misinformation and creating a less hostile climate for business that is not subject to U.S. sanctions.
“What would be wrong with foreigners coming into Iran, getting all the official licenses, and investing money to build even power substations for them? [cryptocurrency mining] farms? “he asked Al Jazeera, saying” It would be a win for them, the government and the people. “
“Crypto mining is the most finished industry in Iran right now under sanctions and this is while miners are paying for their electricity at export rates,” Salehi said.
Although the editor of Jomhouri-e Eslami has gone out against “red farms”, only one Chinese-owned crypto mining farm in the country, Mostfa Rajabi Mashhadi, reports the Iranian power industry, to television the state last week.
That farm is run by the Iran & China Investment Development Agency. On January 14, Iranian officials announced that it – along with several other Iranian crypto farms – would have cut power for two weeks without prior notice.
Mohammad Hassan Ranjbar, Head of Iran & China Investment Development Group, issued a statement criticizing the movement and media hype surrounding cryptocurrency mining.
“China is currently the only country that can invest in Iran because of sanctions. It is rich and rich in technology, so we can create the reasons for more investments by helping each other, ”he wrote, warning that China could take its business to another country. , as bitcoin mining is “profitable anywhere in the world” at the recent valuation.
“They don’t even have to build power substations, they are backed by governments and people, and they are not controlled,” Ranjbar said.
China is currently the only country that can invest in Iran because of sanctions.
Crackdown on illegal mining
Crosshairs are not just crypto farms that operate above board.
President Rouhani’s chief of staff, Mahmoud Vaezi, who served as a four-year term as information and communications technology minister, announced earlier this week that the information ministry would begin an investigation. illegal cryptocurrency mining activity.
“It would also be deceptive to say that the government uses bitcorn,” he said, mistakening the name of the largest cryptocurrency in the world.
Mohammad Hassan Motevalizadeh, CEO of state power company Tavanir, said last week that 45,000 illegal mining machines using 100MW per day were recently imported.
Illegal appliances not caught in the dragnet are estimated to consume up to 300MW per day, or less than one percent of Iran’s peak power consumption.
It would be futile to say that cryptocurrency mining is causing a power outage in Iran with all the evidence to the contrary, said a 30-year-old man who works a legal farm with nearly 1,000 machines and asked to remain anonymous. due to its associated sensitivity.
“The solution to dealing with power pressures for officials and the energy ministry is to develop infrastructures and ways to deliver electricity at precious times,” he told Al Jazeera, adding that the expansion of stations would solar and wind power as one promising route.
“I agree that illegal farms should be tackled,” the Salehi researcher said.
“This signals to foreigners not to come to Iran because something like this could happen to them at every moment.” And it’s wrong to tell people that crypto mining is for profiteers who waste public resources. “