Energy Crisis In Iran — Is Bitcoin Mining To Blame?

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As an analyst with extensive experience in global energy markets and emerging economies, I find myself deeply concerned about the ongoing power crisis in Iran. Having closely followed Iran’s struggle with power demands due to international sanctions and mismanagement, it is disheartening to see the situation escalate further.

Bitcoin mining, though it brings significant profits to mining firms and individuals, often presents numerous challenges. The escalation of cryptocurrency mining has been linked to increased energy costs, grid instability, and even power outages in countries like Thailand, Venezuela, Kazakhstan, and more recently, Iran’s capital and surrounding provinces. These blackouts have disrupted businesses and daily life for locals over the past couple of months.

Local officials in Tehran are questioning whether cryptocurrency mining could be the cause of their ongoing power outage issues. The authorities suspect this activity may have played a significant part in these recurring problems and have called for an investigation to confirm their suspicions.

Iran Faces Increasing Demand For Power

Historically, Iran has faced growing challenges with meeting its energy needs, largely because of international sanctions related to its nuclear program. Additionally, its government’s decision to sell some of its power reserves for budget purposes during regional conflicts and due to mismanagement didn’t help. To alleviate this issue, many Iranians have chosen to forego using their air conditioners as the weather cooled in autumn.

In early November, simultaneous with the nation’s power blackouts, Bitcoin experienced a significant price spike. Notably, following Donald Trump’s Republican election victory, Bitcoin’s price began to climb above $70,000 and eventually reached an unprecedented $100,000 for the first time during the first week of December.

As a researcher, I’ve been exploring potential factors contributing to Tehran’s recurring power outages, and one theory that has caught my interest is the possibility that the global surge in Bitcoin price and increased focus on cryptocurrency developments in the US could be playing a role.

Residents And Local Industries Suffer From Power Outages

Due to the escalating pressure on the nation’s power supply system, policy-makers have become increasingly concerned. As revealed by Mostafa Rajabi, CEO of the government-run power company, some unscrupulous individuals have exploited the country’s subsidized electricity and resources for cryptocurrency mining operations, without proper approval.

Power disruptions are frequent in Iran, indicative of their struggle to maintain the rising energy needs and the deteriorating infrastructure at their power stations. For instance, during the last summer, industrial zones close to the capital city experienced power cuts. Later, in October and November, several neighborhoods within Tehran suffered from power outages as well.

Iran’s Pezeshkian Calls For Accountability

In response to frequent power blackouts, President Masoud Pezeshkian of Iran has ordered certain power plants to cease utilizing mazut, a heavily polluting fuel often used in Soviet countries. Previously, Iran had allowed the use of this fuel to alleviate power scarcity. Additionally, Pezeshkian acknowledged that it is necessary to provide the public with an honest and open evaluation of the current circumstances.

At present, a significant portion of our nation’s electricity is supported by subsidies, contributing to the expansion of cryptocurrency mining. These bitcoin mining operations require substantial energy supplies, which can deplete our national energy reserves.

Masih Alavi, CEO of Viraminer, stated that it’s hard for the government to determine the power consumption of unauthorized mining facilities due to their covert operations. He explained that these miners employ VPNs and lease apartments to conceal their rigs from public scrutiny. Alavi further noted that these operators spread out their rigs among multiple apartments, making it complex for authorities to trace them effectively.

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2024-12-15 11:26