Iran Blockchain Association (IBA) has warned the government over hasty measures and unhelpful protocols for the future of cryptocurrency mining.
The decentralized nature of the technology renders it a “potential solution for addressing challenges faced by the people and businesses” in Iran, especially in their interaction with foreign entities, reads an open letter published on the IBA website.
Unreasonable electricity tariffs in the past three years have made cryptomining unattractive to investors, the letter recalled. The high rates have "resulted in the expansion of underground mining activities, depriving the economy of the benefits of blockchain technology."
Mining virtual currency is legal in Iran and miners can operate under rules approved by the government in July 2019. Mining digital currency without a license from the Ministry of Industries is illegal.
Miners pay their electricity bills based on power export tariffs. In April the Energy Ministry revised regulations for cryptomining as per which 16,574 rials is charged for one kilowatt-hour. Tariffs are cut by half when household consumption is low and the grid is not under pressure as is the case in summer.
Rates double during restrictions like when power plants do not receive enough feedstock, face technical problems or undergo routine maintenance.
Illegal farms have cropped up in the country with increasing speed using subsidized electricity because they must pay much higher tariffs if they operate with a permit.
Illegal miners reportedly use almost 2,000-3,000 MW a day or half the total daily consumption in Tehran city that is home to more than nine million people.
The Raisi administration has prepared a new bill to regulate cryptocurrency mining and is expected to change the rules announced by its predecessor.
Trade in crypto is still banned even though recently the CBI said banks and licensed moneychangers may use the e-currency mined by authorized miners in Iran to pay for imports.
"Unfortunately, a similar approach is taken toward crypto trade, as the Central Bank of Iran and other authorities have been trying to adopt traditional regulatory methods, such as issuing licenses, for controlling the market,” the IBA " wrote.
Official procrastination over the years have caused considerable damage to investors, it complained.
The association urged the government to revise its rules for power rates for cryptomining to enable the sector increase its role in and contribution to the national economy struggling under the heavy burden of the US sanctions and other ills.
