Iran has banned the production of cryptocurrencies for four months as the energy-saving industry has boosted power outages across the country.
In recent weeks, all of Iran’s businesses and households have been shutting down for six hours a day. The direct shutdowns cost the Iranian chess players their match in the Asian Online Championship.
“Everyone is finding a corner to exploit bitcoins and cryptocurrencies,” President Hassan Rouhani said on Wednesday. “Whoever does that today is doing illegal work, even those who have been allowed to do so [to mine bitcoins] others are not allowed until we leave this issue behind [of power cuts]»
Iran’s economy has been hit hard by Donald Trump’s decision to unilaterally withdraw the United States from a nuclear deal with Tehran and impose distortive sanctions. Demand for digital currencies in Iran has grown in recent months as people try to save their savings against 46.9 percent annual inflation and stagnant stock market prices.
On Wednesday, Rouhani instructed the Ministries of Industry, Telecommunications, Energy and Interior to crack down on cryptocurrencies. He said electricity consumption had risen by 20 percent over the past year, although he did not specify what part of it came from cryptocurrencies. This is the second time Iran has tried to use digital currencies.
Pt cryptocurrency mining in Iran has begun in part due to the availability of highly subsidized electricity for the energy-efficient industry. Imports can theoretically be paid for with bitcoins. However, US sanctions ban any banking transactions with Iran, blockchain technology records the details of the transaction, making it difficult for Iranian traders to use cryptocurrency to avoid sanctions.
“Because of our limited experience with sanctions, we have not been able to contact reliable digital currency exchangers,” said one pro-regime businessman.
In 2018, the US Treasury Department identified two digital currency addresses, linking them to two Iranian individuals who allegedly helped exchange Bitcoin ransom payments for Iranian rials. The treasury promised to “aggressively pursue Iran and other fraudulent regimes that try to manipulate digital currencies.”
Despite this, foreign investors, including China, have invested in cryptocurrency mining in Iran. The Chinese operation in Rafsanjani in southern Iran is considered the largest in the country.
Polish, Indian and Turkish companies have also been allowed to mine bitcoin in Iran, Majid-Reza Hariri, head of the Iran-China Chamber of Commerce, told local news agencies on Tuesday.
Analysts are skeptical about whether bitcoin mining is to blame for power cuts. Bitcoin mining, including illegal activities, accounts for less than 10 percent of the country’s electricity generation. They also blame this year’s severe drought for the lack of electricity.
It is not clear how easy the restrictions will be. Last week, the Ministry of Energy tried to stop one operation, but was shot.
Meanwhile, demand remains high. “My girlfriend sold her apartment last year and bought bitcoins, which multiplied her money over the course of a year. “I think I should take a risk, too,” said Anushe, a 35-year-old publisher.