Disbanded illegal cryptocurrency mining centers across Iran have reached 6,914 since the crackdown began in 2020 and most were in five provinces including Tehran.
According to IRIBnews.ir, total power consumption of the banned centers was nearly 645 megawatts, which is equal to the annual consumption of three major provinces, namely North Khorasan, South Khorasan and Chaharmahal-Bakhtiari .
Mining virtual currency is legal in Iran and miners can operate only under rules approved by the government in July 2019. Mining digital currency without a license from the Ministry of Industries is illegal.
However, unauthorized farms have cropped up in recent years with increasing speed using subsidized electricity because they must pay much higher tariffs if they operate with a permit.
Last year 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 in the hot summer months.
Rates double during restrictions like when power plants do not receive enough feedstock or undergo routine maintenance.
Cryptominers were blamed for the chronic power shortages last summer that fueled frustration across the board despite the fact that the share of legal miners in the total electricity consumption is meager, independent experts say.
The state broadcaster said most of the illicit crypto centers were in Tehran Province, followed by Isfahan, Khorasan Razavi, Khuzestan, East Azerbaijan and Fars provinces.
Iran Power Generation, Transmission and Distribution Company, Tavanir, is in charge of finding and closing illegal farms. When found the utility confiscates illegal miners' equipment and their electricity is cut.
They also must pay for the damages they inflict on the national grid that has been struggling to meet rising demand, especially in the hot season.
The utility has adopted various methods for detecting illegal cryptominers namely unannounced inspections, whistleblower reports and monitoring subscribers' consumption patterns.
As per published reports, more than 20% of the unruly miners were detected with the help of whistleblowers. Tavanir has announced rewards of up to 200 million rials ($725) for those who report illegal cryptomining centers, farms and residential units. It says the rewards encourage people to help it find and penalize the wrongdoers.
Tavanir recently claimed that illegal miners used 3.84 trillion rials ($16.5 million) in subsidized electricity and inflicted 380 billion rials ($1.3 million) in damages to the national grid.
From what is known, only 56 cryptomining farms are authorized to operate in Iran with a total consumption of 400 megawatts.
Businesses and informed observers blame cumbersome rules for obtaining licenses along with the high electricity tariffs for the growth in underground cryptomining.
They say power shortages are less due to the illegal mining of digital currency and more a function of mismanagement and ageing infrastructure and technology.
In response to deficiencies in cryptomining regulations, the Raisi administration has prepared a new bill to regulate this type of business and is expected to change the rules announced by its predecessor.
Observers, however, are unconvinced and say it fails to address drawbacks and deficiencies in the existing regulations that have reportedly deprived the sector of the growth it deserves.
