Amid crippling US-led sanctions on Iran and a continually weakened currency, enterprising young Iranians are taking advantage of the country's cheap electricity to mine Bitcoin, however, it's coming at a huge cost to fellow citizens as the immense power-sucking process of mining the cryptocurrency has contributed to a national electricity shortage and rolling blackouts.
Worse, major cities across Iran have over the past month been observed covered in a blanket of smog, which many worry could be toxic, given reports that desperate power plant operators have been resorting to burning low-grade fuel oils to generate electricity.
Despite official denials by Oil Minister Bijan Namdar Zanganeh that power plants have taken such extreme measures, prominent state newspapers have lately featured images of a toxic smog descending on densely-packed residential areas from the fuel burning.
While third-world countries with socialist systems offering free electricity like Venezuela have recently been in the news due to the rise of crypto-mining on the cheap, this is the first instance of illegal mining occurring on such a level as to contribute to major power outages.
Bloomberg describes the surge in cryptocurrency interest followed in the wake of devastating Washington sanctions after Trump withdrew the US from the Iran nuclear deal:
The outages have been compounded by the mining of Bitcoin and other cryptocurrencies, which uses banks of high-powered computers to verify the legitimacy of transactions and create units of digital coin, government officials have said. US sanctions that have isolated Iran from global financial institutions have fueled a surge in cryptocurrency mining in the Islamic Republic, which has some of the cheapest electricity in the world.
All of this also comes as the coronavirus pandemic continues to ravage the country and has shown no signs of slowing, especially given the sanctions have squeezed hospitals and health care along with sectors specifically targeted by the sanctions.
Iranians Defy Warning and Share Pictures of Bitcoin Mining in Mosque -- https://t.co/F7sC3n9eTh via Bitcoin News#bitcoins #Bitcoin2019 #cryptocurrency #cryptocurrencies #Crypto pic.twitter.com/OEsuFEjnow— Bill Gellman (@wsgellman) June 29, 2019
The combination of the pandemic, US sanctions, and government mishandling of the health crisis has set off "an economic depression that could be worse than any in Iran’s modern history," according to one analyst's assessment.
Iranians turning to Bitcoin might be a bright ray of hope for some, but authorities see it as sinister and greedy exploitation of the Islamic Republic's already strained resources and are trying to hunt down the mining operations. "The strains on the electricity grid led the government to start cracking down on illegal mining operations, and about 6,000 mining machines were recently confiscated in Markazi province, the managing director of the Markazi Electricity Supply Co., told ISNA," Bloomberg details.
"A spokesman for the country’s electricity industry apologized for the shutdowns on state TV and said power supplies to Bitcoin miners and industry have been strictly limited to meet domestic needs," the report continues.
Some outspoken advocates pushing for greater global adoption of cryptocurrency as a prime medium of exchange have said precisely that it could be used by governments to beat sanctions. Venezuela, Iran, or even Russia could one day be the first test cases for such as scenario as their economies continue to be severely strained by US punitive economic measures.