The government is drafting new measures to further reduce unauthorized cryptomining in the country.
According to Mohammad Khodadadi, the official in charge of supplying power to legal cryptomining centers at the Iran Power Generation, Transmission and Distribution Company (Tavanir), the plan calls for prison terms for illegal miners identified for the second time.
"Their activities are a threat to the country's energy security, they inflict huge damage on the national grid…and so the consequences must be in proportion to the damages" YJC quoted Khodadadi as saying.
"The plan has two main parts: the first is centered on increasing fines and penalties by three to five times for those who misuse subsidized electricity for cryptomining," he added.
In July 2019 the government said it would accept cryptomining as a legal industry. Miners were required to acquire license from the Ministry of Industries and pay their electricity bills based on export rates.
However, illegal farms have cropped up with increasing speed using subsidized electricity because they must pay much higher tariffs if they operate with a permit.
When power shortages increased last summer, Tavanir started shutting illegal cryptomining units to curb blackouts. 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 often struggles to meet rising demand, especially in the hot summer months.
Disbanded illegal cryptocurrency mining centers across Iran have reached 6,914 since the crackdown began in 2020 and most were in five provinces, namely Tehran.
Total power consumption of the banned centers was nearly 645 megawatts, which was the same as the annual consumption of three major provinces, namely North Khorasan, South Khorasan and Chaharmahal-Bakhtiari.
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.
"The other part of the plan seeks to promote use of alternative sources of energy like renewables or flare gas," Khodadadi said.
As per law, miners can enter into agreements with renewable power plants at negotiable rates and/or set up their own renewable power plants.
The plan calls for developing a specific platform for listing authorized miners, mainly to improve the transparency of licensed mining units.
The official referred to the cryptomining hardware produced inside the country and said that there is no difference between the domestic machinery and their imported peers.
"Miners must register their devices with the Ministry of Industry, Mining and Trade irrespective of their origin."
The new rules reportedly ban cryptomining and all related services, including importing, producing, selling and installing mining equipment for those with a valid license.
Improving Efficiency
The government's move comes after publication of a study by the Majlis Research Center, in which the existing penalties and restrictions were found to be ineffective.
“Estimates about the total volume of cryptocurrencies mined in Iran between April 2021 and August 2021 shows that more than half the illegal miners were indifferent to the government decision to ban cryptomining,” the recent report noted.
It called on policymakers to make informed judgments on the crypto industry as a whole so that the country can benefit from innovative technology with minimum cost.
“The existing policy will likely have no positive impact on the economy,” the MRC said.
From what is known, only 56 cryptomining farms are authorized to operate in Iran with a total consumption of 400 megawatts.
