A serious power crisis is what Iran is currently going through, and an unprecedented heatwave only serves to further deteriorate the situation. In a bizarre bid to crack down on this issue, the government of Iran has just announced a $20 bounty for citizens to act as informants on illegal cryptocurrency mining operations within the country.
One state-run electricity company has already started this campaign: Tavanir. It fights the unauthorized consumption of subsidized electricity, which officials say contributes to ongoing power shortages hounding the country.
Heatwave And Power Shortages
The current heatwave has pushed temperatures in Iran to a scorching 49.7°C, or 121°F, the hottest period to have hit in 50 years. This brought about rampant power outages, which affected daily life and industrial production.
Chief Executive of Tavanir, Mostafa Rajabi Mashhadi, now says the illegal miners are just taking advantage of this situation and consuming a lot of electricity without authorization. He said these operations were not just small, they consume electricity equivalent to the requirement of an entire province, putting unbearable pressure on the national grid.
The Iranian government has banned cryptocurrency mining before, in 2021, citing the same concerns about consuming a huge volume of energy. It later lifted the ban at least partially because of economic pressure from US sanctions.
Now, with the grid under strain, officials are taking an even harder stance. They feel that incentivizing members of the public to turn in illegal miners could help alleviate some of the pressure on the electricity supply.
The Bounty System
This new bounty system will pay one million toman for information leading to the confiscation of unauthorized mining operation hardware. According to reports, the financial incentive is supposed to encourage citizens to act against illegal miners, who often set up shop in public facilities like schools and mosques—locations that benefit from subsidized electricity and were therefore prime targets for unauthorized mining setups.
Reports also have it that more than 230,000 illegal mining devices have already been seized, consuming 800 to 900 megawatts of power. To put that into perspective, local authorities compared the consumption to Markazi Province’s electricity needs and highlighted that providing this much electricity would require the construction of a new 1,300-megawatt power plant.
The Broader Implications
The Iranian government is clamping down on the illegal mining of cryptocurrency as part of a larger approach to managing the nation’s energy resources properly. Much as crypto mining might be highly rewarding, it has serious implications for energy use and environmental sustainability.
Some critics argue that targeting cryptocurrency mining as a prime cause for the shortfall in power supply is totally misplaced. Some experts find the real problems in grid mismanagement and huge investments that are required for it.
Crypto mining has had a boom in Iran over the past few years, thanks to abundant natural gas and electricity. Yet, crypto mining has created a complex relationship with cryptocurrency that empowers the country to bypass sanctions on one hand and overload its power supply on the other.
Featured image from ASIC Jungle, chart from TradingView
