The Iranian Ministry of Energy has decided to cut the electricity provided to the nation’s approved crypto mining operations. According to Tehran Times, this decision’s execution will start the following Wednesday. The reason for this step is to prevent unlicensed mines from accessing the power supply.
As stated, the 118 government-approved mining firms in Iran would no longer have access to electricity starting on June 22 due to seasonal increases in demand. Mostafa Rajabi Mashhadi, a spokesman for Iran’s power sector, announced it.
Safeguarding Iran’s domestic energy supply
This year, in January, the Iranian government granted 1,000 cryptocurrency miners permission to mint the token. 118 permitted mines are currently using the nation’s electrical supply. The country’s consumption for the preceding week was 62,500 megawatts (MW). The country’s electricity supply will be confined if the power usage exceeds the threshold of 63,000 MW.
In the past, the Iranian government banned cryptocurrency mining to protect the nation’s power supply. It was recorded that the illegal mining at the time used close to 600 megawatts of the power grid. The prohibition stayed in effect until the beginning of March this year. According to estimates, it might release up to 209 megawatts of domestic power supplies.
Actions to halt illegal mining
Iran has been dealing with the problem of unauthorized mining for a long time. Therefore, the Iranian government authorized the operation of cryptocurrency mining in 2019. Around 1,000 mines received permission to use the power supply at the start of 2020. As a result, the nation’s mining operations increased. However, some unauthorized mines began minting the tokens using the domestic supply.
The Iranian minister also gave the unlicensed miner a severe fine warning in 2021 for the harm they had done to the nation’s electrical supply due to their inappropriate actions. The problems for Iran’s electric industry and its resources, which are already hampered by climate conditions, include drought and a lack of rain. Moreover, it got intensified due to bitcoin mining.
Cryptocurrency continues to plunge
Crypto miners are observing that it is becoming unprofitable to mine Bitcoin and Ethereum as their prices keep falling to new lows. Data from CryptoRank show that mining is now substantially less profitable due to the decline in the price of bitcoin. The data show that the average mining cost and the price of Bitcoin are currently equal. When this information was released on June 17, the price of Bitcoin had ascended past $20,000. Since then, it has briefly plunged below $18,000, making it more unprofitable to mine the flagship asset.
In the case of Ethereum, the return from mining is not profitable due to the median cost of electricity in Europe and the United States. In May last year, blockchain analytics company Elliptic calculated that 4.5% of all Bitcoin mining occurred nationwide. As per Cambridge Centre for Alternative Finance, that percentage dropped to 0.12% in January.
📉#BTC Price Drops to Average Cost of Mining— CryptoRank Platform (@CryptoRank_io) June 17, 2022
Due to a significant drop in $BTC price over the past months, $mining has become less profitable. For some #Bitcoin miners, it might even be unprofitable at the moment.
To conclude, Iran and the cryptocurrency mining industry have a sort of love-hate relationship. Iran began providing licenses to miners in 2019. It officially recognized the crypto industry. However, the miners had to pay increased electricity costs. Before the prohibitions, cryptocurrency mining was growing in Iran. Moreover, they must sell the bitcoin they mined to Iran’s central bank. Moreover, Iran is only accountable for about 0.12 percent average monthly hashrate of Bitcoin as per the CBECI. Thus, it is difficult to assume that this decision would have a remarkable impact on the Bitcoin Network.
Besides, Iran accounts for only about 0.12% average monthly hashrate of Bitcoin as per the CBECI. Therefore, it is difficult to assume that this decision would have a significant impact on the Bitcoin Network.