In reaction to unforeseen power outages in major cities of Iran, Iranian President Hassan Rouhani has declared a four-month halt on all cryptocurrency mining.
In televised remarks on May 26, Rohani stated that “cryptocurrency operations and cryptocurrency mining must halt” in Iran until September 22.
Iranian officials have regularly accused unlicensed Bitcoin miners of depleting the electrical system and increasing air pollution levels in various cities.
The processes consume a tremendous amount of energy because they employ banks of high-powered computers to solve complicated numerical riddles relating to international financial transactions.
When cryptocurrency miners are successful, they generate units of so-called digital currencies that may be exchanged internationally without the scrutiny and constraints of traditional financial markets.
Faced with strong US economic sanctions, Iran loosened limits on cryptocurrencies in August 2019 to evade the traditional financial systems it is barred from utilizing. As a result, cryptocurrencies such as Bitcoin that are ‘legally’ produced in Iran can now be used to finance imports from other nations.
Meanwhile, Iran's subsidized electricity has made power-sucking mining activities cheaper than in other countries.
On May 26, Rouhani stated that ‘illegal’ cryptocurrency miners with access to subsidized electricity are now consuming up to seven times the electricity of individuals with licenses for lawful cryptocurrency activities.
Iran implemented rolling blackouts on May 23 to relieve strain on the national power infrastructure.
Mostafa Rajabi Mashhadi, a spokeswoman for the national electrical utility, stated on May 22 that licensed cryptocurrency miners had already voluntarily shut down their operations to alleviate the strain.
On May 25, Energy Minister Reza Ardakanian apologized to Iranians for "shortcomings and pressures" that resulted in unanticipated outages. According to Ardakanian, Iran's electrical infrastructure is overwhelmed due to a drought that has curtailed hydropower output while unusually warm weather has increased demand for air conditioning.