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Illicit Cryptominers Are Cause for Concern in Iran

Illicit Cryptominers Are Cause for Concern in Iran
Illicit Cryptominers Are Cause for Concern in Iran

Legal cryptomining accounts for 13% of the total electricity used by this sector in Iran, the spokesman for the Iran Power Generation, Distribution and Transmission Company (Tavanir) said, expressing renewed concern over possible blackouts in the summer season.
"An estimated 1,500 megawatts is consumed for mining cryptocurrencies 87% of which is illegal. So far we have identified and deactivated 322 MW of illegal consumption," Mostafa Rajabi Mashhadi was quoted as saying by the way2pay website.
While cryptomining is accepted by the government as legal, illegal farms are increasing rapidly using subsidized electricity because they must pay much higher tariffs if they operate with a permit.
In July 2019 the government said it would accept cryptomining as a legal industry. As per rules, miners are required to obtain an operational license from the Ministry of Industries and pay their electricity bills based on export rates.
The government measure was first welcomed by the miners but soon they started complaining about the high power tariffs and took their business underground.
In April the Energy Ministry in April said miners will be charged 16,574 rials for one kilowatt-hour and that the base rate would be cut by half when household consumption is low and the national grid is not under pressure as usually is the case in the hot summer months.
The base rate, however, is four times higher than the previous 4,800 rials. Prices are set based on power export tariffs based on currency rates at Nima – a currency platform where forex is traded among importers and exporters. Base rates will be updated at three-month intervals and subject to forex rates. 

Mining at Home

The steep rise in the price of cryptocurrencies in recent months has apparently made mining more tempting in Iran and other countries. Tavanir said it shut 1,100 unlicensed crypto mining farms in the past several weeks.
Likewise, the judiciary also reported a jump in lawsuits related to illegal cryptomining and called for stringent rules to further restrict subsidized electricity for the crypto farms.
"What is causing concern is the growing number of miners in residential units," Rajabi said. "Cryptomining at home is likely to damage power distribution systems. Miners should apply for a license and conduct their business in the industrial zones."
Abrupt overconsumption of households if they are mining the digital currency is easy to discover, Rajabi said. "Average consumption of 80% of subscribers in temperate climate is less than 300 kWh in summer. As such, overconsumption is easy to detect."   
Tavanir is offering incentives to whistleblowers who inform on unauthorized miners. Incentives include 100 million rials ($385) in cash rewards. Almost 500 cryptomining farms were uncovered with the help of whistleblowers.
Free Zone Mining
Rajabi revealed that most illegal mining farms are located in free trade zones. This is while, FTZ officials said earlier that miners could use the excess output from power grids in the free and special economic zones.
"As per rules power generated in the FTZs cannot be used in the mainland nor can it be traded. Therefore, the excess can be used for cryptomining," an official with the High Council of Free Zones and Special Economic Zones has been quoted as saying.
Twelve cryptomining farms reportedly operate in the zones

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