How Much Bitcoin Has Iran Mined? It's Complicated
Iran is mining and trading cryptocurrencies out of necessity, driven by tough international sanctions and the collapse of its currency due to high inflation since 2019. However, experts told Decrypt that valuing its assets remains extremely difficult.
The University of Cambridge's Centre for Alternative Finance estimated that Iran accounted for 7.5% of Bitcoin's hashrate in March 2021, while that figure had fallen to just 0.12% in January 2022.
Andrew Scott Easton, founder and CEO of Bitcoin mining fund Masterminded , estimates that approximately 60,000 BTC have been mined in the country's history , which would be worth $6.4 billion at current prices.
Meanwhile, Kent Halliburton, co-founder and CEO of mining platform Sazmining , estimates that the country has mined between 100,000 and 200,000 BTC since 2018. That could mean its assets are valued at between $10.7 billion and $21.4 billion. Timing is of the essence, as Iran began issuing official cryptocurrency mining licenses in 2019.
However, Rajat Ahlawat, a researcher at compliance firm Crystal Intelligence , told Decrypt that this is too difficult to assess. He explained that this is because Iran's mining industry has largely gone underground in an attempt to avoid high electricity prices.
The most easily tracked segment is legally licensed cryptocurrency mining farms. According to the National Council of Resistance of Iran , a coalition opposed to the current government in Iran, about 1,000 licenses for cryptocurrency mining farms were issued in 2020. The same source reported that more than 10,000 licenses were issued to miners and exchanges in 2022.
However, former President Hassan Rouhani himself said that as of 2021, about 85% of Iran's mining was unlicensed. Iran's state-owned electricity company Tavanir estimated that there were about 700,000 illegal mining rigs operating in the country earlier this year.
According to Ahlawat, this is because licensed mining farms often find it difficult to make significant profits due to the high tariffs and electricity prices they are charged.
“For example, the metal industry — they use a lot of electricity for smelting and other processes — but the rates that the metal industry pays are lower than what [cryptocurrency] miners pay,” Ahlawat told Decrypt , explaining why so much mining is going underground.
When a new bitcoin is mined, there is no trace of the miner's location in the chain. This means that its origins cannot be traced, allowing Iranian citizens and the government to avoid international sanctions.
As a result, a condition of the cryptocurrency mining license is that any bitcoin mined must be sold directly to Iran's central bank so that the government can benefit from avoiding sanctions. However, this results in individual miners and groups losing out on the benefits of bitcoin mining.
Thus, much of the mining in Iran is carried out by individuals and institutions such as schools and mosques that have access to free or heavily subsidized electricity, Ahlawat explained. Not to mention organizations with ties to the government that also mine bitcoin and benefit from reduced electricity rates.
Bitcoin mining rig in a mosque in Iran.
Mosques get free electricity. pic.twitter.com/JISbo5K95A
— Whole Mars Catalog (@WholeMarsBlog) May 23, 2021
These illegal operations put significant pressure on Iran's electricity grid, sometimes causing power outages across the country and robbing electricity providers of potential profits. It has become such a serious problem that Tavanir has begun offering rewards to those who report them.
Source: cryptonews.net
