The judiciary in Tehran has reported a jump in court cases related to illegal cryptomining calling for new measures to further restrict subsidized electricity for mining cryptocurrencies.
“Utilities and the Ministry of Industries need to work closer with the judiciary to help curb illegal cryptomining and cryptomining-related offences,” IRNA quoted Ali Tazreji, a judicial official as saying.
The Energy Ministry's concerns over possible power outages in summer and indirect subsidies pumped into crypto mining, prompted the government to increase electricity rates for cryptocurrency mining to 7 cents/one kilowatt-hour.
In July 2019 the government said it will recognize cryptocurrency mining as a legal industry. This was first welcomed by miners as a positive gesture, but many complained about the high power tariffs. Later some of them took their lucrative but illegal operations underground to deceive utility companies.
Tazreji put the majority of cryptomining-related cases into two categories: those without license from the Ministry of Industries and those who are authorized but illegally use cheaper and subsidized electricity.
As per earlier announcements, miners are charged 4,800 rials for one kilowatt-hour that is half the electricity export rate in autumn, winter and spring. However, future billings are planned to be based on 19,300 rials/kw, twice the price for exported electricity in summer (June to Sept). The official did not provide details.
The CBI said earlier that activities related to cryptocurrency are illegal and banned the people and organizations from joining payment networks operating on blockchain technology.
A Welcoming Approach
It seems that the sharp increase in the price of major cryptocurrencies in recent months has made mining more tempting to Iranians.
Bitcoin has surged higher soaring to new all-time highs of over $24,000 per bitcoin after beginning the week at under $19,000. The price of bitcoin has surged by more than 400% this year from a low point of around $3,600 in March, when the coronavirus pandemic triggered a deep sell-off in financial markets around the world.
Experts say the government approach to cryptomining is biased against private enterprise. They have proposed development of alternative solutions for feeding crypto farms and at the same time meeting high power demand in peak seasons, such as a mechanism for selling unwanted output from power plants in a secondary market, where prices are the function of supply and demand.
"Miners will soon find new ways to link to the national grid illegally," Hamed Salehi, a blockchain researcher, told the Financial Tribune. "Pushing the industry underground is not something the government should favor because it will hurt its revenue base."
By restricting cryptomining business (mainly through high power tariffs), the government in fact creates the grounds for a blackarket simply because "restrictive measures will not kill enthusiasm for the lucrative business."
