Iran will shut off electricity to all its 118 authorized crypto mining facilities this month. Authorities in the country have taken similar measures earlier, citing the increased need for electricity during the summer.
Iran Cuts Power to Crypto Mines
Iran’s Ministry of Energy has decided to cut off electric power provided to the country’s legal crypto mining facilities. According to a report from the Tehran Times, the decision will be executed on Wednesday. Such action is being implemented in order to cut off power to illegal mining operations, said Mostafa Rajabi Mashhadi, a spokesman for Iran’s power industry.
In January of this year, the Iranian government granted 1,000 crypto mines licenses to mint the token. Currently, 118 authorized mines are using the country’s electrical supply. In the preceding week, the country consumed 62,500 megawatts (MW). It is estimated that the nation’s electricity demand will exceed 63,000 MW, which will limit the country’s supply.
The Iranian government similarly outlawed crypto mining last year in order to conserve the country’s electricity supply. It was uncovered that the illegal mines consumed roughly 600 megawatts of power at the time. The ban remained in effect until the beginning of March this year. It was estimated to liberate up to 209 megawatts of domestic power supplies.
Efforts to Combat Unauthorized Mining
Iran has been grappling with the issue of illegal mining for a long time. Iran’s government gave crypto miners the green light to operate in 2019. Around 1,000 mines were allowed access to the electrical grid at the start of the year 2020. As a result, mining activity in the country rose. However, some unauthorized miners began minting tokens using the domestic power supply.
The Iranian minister also issued a stern warning to the illegal miners in 2021, demanding they pay heavy fines for the damage done to the country’s electrical grid. Crypto mining has exacerbated problems for Iran’s power industry and its resources, which are already dealing with climate issues such as drought and a lack of rain.
Rising Challenges for Crypto Miners
Before the prohibitions, cryptocurrency mining was booming in Iran. Elliptic, a blockchain analytics firm, estimated in May last year that the country accounted for 4.5% of all Bitcoin mining. According to the Cambridge Centre for Alternative Finance (CCAF), this ratio dropped down to 0.12% in January.
As Bitcoin and Ethereum’s prices continue to fall to new lows, crypto miners are realizing that the rising cost of mining these assets is making them unprofitable.
According to CryptoRank data, the reduction in Bitcoin price has rendered mining unprofitable. According to the data, the average cost of mining and the price of Bitcoin has now reached parity.
On June 17, when this data was first released, the value of a bitcoin was above $20,000. Since then, its price had briefly fallen below $18,000, implying that mining the flagship asset would become even more unprofitable. For Ethereum, the mining incentive is less than the cost of electricity in Europe and the US.