Iran Closes Crypto Mining Operations to Prevent Winter Blackouts

Tuesday, 28/12/2021 | 07:36 GMT by Nicholas Otieno

Iran orders temporary shutdown of crypto mining operations.

Crypto mining still accounts for a large amount of national energy usage

Iran expects energy needs across the nation to increase during low temperatures in the coming months. Thus, local energy authorities in the country have decided to halt operations of authorized cryptocurrency mining facilities as part of the measures to limit high energy consumption during the upcoming winter season. Mostafa Rajabi Mashhadi, the Chairman of the Board and Managing Director of the Iran Power Generation, Distribution and Transmission Company (Tavanir), recently announced the government has taken measures to limit consumption to avoid shortage of electricity supply across the nation. Just like witnessed earlier this year, such measures will affect the nation’s rising crypto mining industry. As a result, Mashhadi has instructed authorized cryptocurrency mining centers to unplug their power-hungry hardware.

Iranian authorities are, therefore, temporarily shutting down crypto mining facilities to reduce liquid fuel consumption amid the looming decreasing temperatures. Mashhadi stated that since last month, Iran’s Ministry of Energy has been trying to reduce the usage of liquid fuels in power plants. Mashhadi had a conversation with The Islamic Republic of Iran Broadcasting (IRIB) state-owned media company on Saturday, December 25: “The Energy Ministry has been implementing measures since last month to reduce the use of liquid fuels in power plants, including cutting licensed crypto farms’ power supply, turning off lampposts in less risky areas and stringent supervision of consumption.”

Mashhadi believes that such measures would assist in preventing potential blackouts in winter when electricity demand is higher. While the executive stated that Iran's power plants have managed to save some fuel for the next few months, he emphasized that citizens should exercise caution regarding the usage of gas and electricity. In fact, about 70% of the fuel consumed in Iran is used for heating buildings. Therefore, the government expects the new energy-savings measures to cut energy consumption by at least 40%.

Crypto Mining And Energy Crisis

As reported by Finance Magnates in May, Iran issued a four-month ban on mining crypto coins like Bitcoin after cities suffered unplanned blackouts. President Hassan Rouhani told a cabinet meeting that the major cause of the blackouts was a drought that had affected hydroelectric power generation. But, the president stated that crypto mining, 85% of which is unlicensed, was consuming more than 2GW from the national grid each day.

Iranian authorities officially recognized crypto mining in 2019 and later developed a licensing regime that expected miners to identify themselves, sell the mined Bitcoin to Iran’s central bank, and pay higher tariffs for electricity. In May, President Rouhani stated that unlicensed centers were using between six and seven times more power, and, therefore, the government had to ban all crypto activities until September. During that time, the energy minister apologized to the local citizens for the unplanned blackouts that affected households and businesses in Tehran and many other cities.