Although Bitcoin mining is a largely profitable venture for mining companies and individuals, it can cause a lot of problems. The rise of cryptocurrency mining could push up prices, weaken networks, and even cause power outages in some countries like Thailand, Venezuela, and Kazakhstan. The Iranian capital and its neighboring provinces also announced this Rolling power outages In the past two months, disrupting businesses and the daily lives of local residents.
While local authorities have put forward several underlying factors for the recurring problem, they may suspect that cryptocurrency mining played a crucial role in the issue. Tehran’s recent problems with ongoing power outages have raised concerns among local officials, and they have called for an investigation into the potential liability of cryptocurrency miners.
Iran faces increasing energy demand
Iran has historically suffered from increased energy demand, primarily due to international sanctions imposed on its nuclear program. It also didn’t help that its government sold some of its energy reserves to increase its budget while addressing regional conflicts and even mismanagement. To help address these concerns, many Iranians stopped using their air conditioners as weather conditions improved in the fall.
The country’s power outages coincided with a massive rise in Bitcoin prices in early November. Immediately after the election of Republican Donald Trump, the price of Bitcoin began to rise above $70,000, finally reaching the $100,000 mark for the first time in the first week of December.
Some local Iranian authorities suspected that the rising price of bitcoin and interest in cryptocurrency developments in the United States may have played a role in the capital’s frequent power outages.
Residents and local industries suffer from power outages
The increasing pressure on the country’s electricity grid has caught the attention of policymakers. According to Mustafa Rajabi, CEO of the government-owned energy company, some opportunistic individuals have exploited the country’s subsidized electricity and other resources for cryptocurrency mining activities without a license.
Power outages are common in Iran, reflecting its failure to meet rising demand and aging power equipment at its plants. Last summer, industrial areas near the capital were subjected to power outages. Then, in October and November, Tehran neighborhoods were hit by power outages.
Iranian Pezeshkian calls for accountability
Facing regular power outages, Iranian President Masoud Pezeshkian instructed some stations to stop using mazut, a highly polluting fuel common among Soviet countries. Iran has agreed to use this fuel in the past to address energy shortages. Pezeshkian also admitted that it was time to provide the public with a fair and transparent assessment of the current situation.
Currently, electricity in this country is largely subsidized, which has helped stimulate the growth of cryptocurrency mining. These Bitcoin mining facilities require large amounts of energy, draining the country’s reserves.
According to Masih Alavi, CEO of Viraminer, it is difficult for the government to determine how much energy is consumed by unauthorized mining facilities. He added that these miners use VPNs and rent apartments to hide their platforms from public view. These operators distribute excavators across several apartments, making it difficult for authorities to track them, Alawi said.
Featured image from DALL-E, chart from TradingView
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