The head of Iran Blockchain Community says imposing high tariffs on electricity consumption by cryptocurrency mining is actually pushing miners out of Iran and into neighboring countries waiting with open arms.
Describing the government’s decision as “self-immolation”, Sepehr Mohammadi said a large number of crypto investors have moved to Russia, Georgia and Armenia.
“Each kilowatt-hour currently costs 2 cent for cryptocurrency miners in Kazakhstan, Turkmenistan, Russia and Georgia,” Fars News Agency quoted him as saying.
This is while the government in Tehran has set 7 cents for each kilowatt-hour of electricity for crypto mining.
“Miners have shut down their mining equipment since the beginning of summer,” Mohammadi said.
In June the government said it will recognize mining cryptocurrency as a legal industrial activity that can be taxed like any other business.
As announced by the Energy Ministry deputy for power and electricity, Homayoon Ha’eri, cryptocurrency mining is subject to the same tariffs as used for electricity export.
Mohammadi criticized that move to impose power export tariffs on mining activities, claiming that instead of offering discount to its own people the government is demanding rates far above electricity export rates.
The IBC chief added that the government approach to crypto mining activities is unfriendly to private enterprise. “We could have created jobs by extending cryptocurrency business… we could have a win-win situation the government,” he lamented.
“For every 1,200 mining with two megawatt of power consumption there can be 36 employment opportunities.”
Cryptocurrency mining in Iran had become a lucrative business in recent years due to the extremely low-cost electricity. Each kilowatt-hour cost 0.5 cent.
Addressing government concerns over the possibility of capital flight because miners were using cheap electricity, crypto miners claim 70-80% of the revenue from the production of cryptocurrencies goes back to its production cycle, which means that claims of capital flight are irrelevant.
IBC says power use by cryptocurrency miners in their entirety is hardly 0.5% while road lighting alone consumes a whopping 2% of the total electricity.
