Anika Begay
Iran is in the midst of a severe energy crisis, and an unprecedented heat wave is only making matters worse. In a bizarre attempt to crack down on this problem, the Iranian government has just announced a $20 reward for citizens who act as whistleblowers about illegal cryptocurrency mining operations within the country.
One state-run electricity company has already launched this campaign: Tavanir. It combats unauthorized consumption of subsidized electricity, which officials say contributes to the country’s ongoing power shortages.
Heat wave and electricity shortage
The current heatwave has pushed temperatures in Iran to a scorching 49.7°C, or 121°F, the hottest in 50 years. This has caused widespread power outages, affecting daily life and industrial production.
Tavanir’s chief executive Mostafa Rajabi Mashhadi now says that illegal miners are just taking advantage of this situation and consuming a lot of electricity without permission. He said that these operations are not just small, they consume electricity equivalent to the needs of an entire province, putting unbearable pressure on the national grid.
Source: Elliptic
The Iranian government had already banned cryptocurrency mining in 2021, citing the same concerns about consuming a huge amount of energy. It later lifted the ban at least in part due to economic pressure from US sanctions.
Now, with the grid under pressure, officials are taking an even tougher stance. They believe incentivizing citizens to report illegal miners could help relieve some of the pressure on electricity supplies.
A view of Iran. Image: European Parliament
The size system
This new reward system will pay one million tomans for information that leads to the confiscation of hardware for unauthorized mining operations. The financial incentive is reportedly intended to encourage citizens to take action against illegal miners, who often set up shop in public facilities such as schools and mosques, places that benefit from subsidized electricity and were thus prime targets for unauthorized mining installations.
It is also said that more than 230,000 illegal mining devices have already been seized, consuming 800 to 900 megawatts of energy. To put things into perspective, local authorities compared the consumption with the electricity needs of Markazi province and pointed out that providing that much electricity would require the construction of a new 1,300 megawatt power plant.
The wider implications
The Iranian government is cracking down on illegal cryptocurrency mining as part of a broader effort to properly manage the nation’s energy resources. While cryptocurrency mining can be highly profitable, it has serious implications for energy use and environmental sustainability.
Some critics argue that considering cryptocurrency mining as the main cause of electricity shortages is completely misplaced. Some experts find the real problems in the poor management of the network and the huge investments that are required for it.
Crypto mining has boomed in Iran in recent years, thanks to the abundance of natural gas and electricity. However, crypto mining has created a complex relationship with cryptocurrency that allows the country to skirt sanctions on the one hand and overtax its energy supply on the other.
Featured image from ASIC Jungle, chart from TradingView
