Following announcements on 27 July 2020 by Mostafa Rajabi Mashhadi, a senior executive at Iranian power corporation Tavanir, power plants have been approved to operate as crypto mines. These are subject to government regulations and scrutiny. Cointelegraph reported that Iran is performing a crackdown on unlicensed crypto mines.
Iran’s Mining Strategy
Iranian President Hassan Rouhani, in May 2020, enjoined the country’s power producers to embark upon ventures in crypto mining to strengthen the industry in that country, according to Bitcoin.com. He invited the country’s energy departments, the Central Bank, and the Finance Minister to introduce measures to create a burgeoning market for potential cryptocurrency miners. In this regard, Iran’s Ministry of Industries has approved about 1,000 licences since mid-2019, according to Cointelegraph.
Iran’s crypto mining relies heavily on market factors such as petrol prices in the region. The state fiscus has endeavoured to provide subsidies to crypto miners where possible to encourage investment in the field.
Crackdown on Illegal Mining
Iran issues stringent penalties on those violating the state’s approved crypto mining mandate. Cointelegraph reports that those exposing unauthorised miners receive about $480 in compensation for their cooperation.
A caveat on crypto miners in the country is that they don’t use state subsidised fuel in their production. Those caught circumventing this particular rule are subject to a $20,000 fine, with an additional fine of $2,000-$5,000 if caught using illicit and smuggled hardware, according to Cointelegraph.
Commentators note that Iran’s official endorsement and promotion of crypto schemes aims at quelling rising US sanctions. According to Foreign Policy, Western sanctions on Iran have shrunk its economy by 10%-20% in recent years. This subsequently led to an increase in the use of Bitcoin, which the Iranian state uses to circumvent legal issues.
The increased use of cryptocurrency in Iran will enhance international trade and thereby support the ailing national fiscus.