World Iran crypto miners cry foul over electricity backlash

23:17  22 january  2021
23:17  22 january  2021 Source:   aljazeera.com

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Iran is experiencing electricity shortages partly blamed on cryptocurrency mining, allegedly by Chinese companies and the Revolutionary Guards. Electricity cuts in the capital Tehran have become a daily occurrence in the past two weeks, with the police expressing concern Tuesday over its possible

Iran has blamed bitcoin ' miners ' for massive power blackouts as supercomputers suck the country's power dry to create cryptocurrencyCredit One legal mine run by Chinese- Iranian computer experts in the city of Rafsanjan was reported to have been using 175 megawatt hours of electricity - enough to

Tehran, Iran – An Iranian newspaper this week shamed government authorities for allowing cryptocurrency farms – especially those belonging to the Chinese – to mine bitcoin in Iran.

a lit up building at night: Mining bitcoin requires a lot of electricity, which is subsidised in Iran [File: Akos Stiller/Bloomberg] © Mining bitcoin requires a lot of electricity, which is subsidised in Iran [File: Akos Stiller/Bloomb... Mining bitcoin requires a lot of electricity, which is subsidised in Iran [File: Akos Stiller/Bloomberg]

“Burning away public trust is even more dangerous than burning the people’s money in Chinese cryptocurrency farms,” read the Jomhouri-e Eslami editorial titled “Red farms!”

The accusations are not confined to one newspaper. For two weeks, Iranian social media, state-affiliated media, and dozens of local and national officials have weighed in on the subject of crypto farms, their electricity consumption and the alleged role mining plays in harming the nation’s air quality.

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The deputy energy minister of Iran has said that electricity bills for digital currency miners should be calculated in accordance to real prices, Iranian economic Iran ’s deputy energy minister, Homayoun Haeri, has stated that electricity bills for cryptocurrency mining activities should be priced according

Electricity in Iran is currently very cheap due to government subsidies; one kilowatt hour of electricity currently costs

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Iran ’s generously subsidized electricity has put the country on the crypto -mining map, given Iranian cryptocurrency miners have been known to use ransomware in sophisticated cyber attacks, such As the government publicized its clampdown on Bitcoin farms, miners balked at all the blame over their

The Economic Commission of Iran has finalized power tariffs for cryptocurrency miners , based on similar tariffs used for electricity exports. The news was announced by Homayoun Ha'eri, the country's deputy energy minister for power and electricity , Financial Tribune reported Sunday.The post Iran

.05, with power being cheaper in Similar to today’s statements from Energy Minister Ha’eri, Hemmati said that a planned law will require crypto mining in Iran to abide with the price of

But members of the crypto community are crying foul, arguing that they are being scapegoated for Iran’s mounting woes as it battles the worst COVID-19 crisis in the Middle East and the crushing financial blow of the pandemic and United States economic sanctions.

Power outages and pollution

Crypto miners run powerful “farms” of computer gear that compete within a global, decentralised computer network to verify transactions made with cryptocurrencies such as bitcoin.

In exchange for verifying “blocks” of transactions, miners are rewarded with new coins.

The profits can be handsome. Famously volatile, bitcoin surged to an all-time high value just shy of $42,000 on January 8 but has since fallen back to around $31,000.

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Cryptocurrency miners in Iran will be detected and face power cuts, an official from the country's state-run power generation and transmission company Tavanir, has warned. According to a report from Iran Front Page (IFP) News, Mostafa Rajabi Mashhadi has said that it is illegal to use the national grid for

Three Iranian power plants with enough output to supply half of New York City will begin selling some surplus power to crypto miners . Thermal Power Plant Holding Company (TPPH), which owns and operates plants all across Iran , said crypto miners could now offer to buy electricity from three of its

But crypto mining requires a lot of electricity, which is subsidised in Iran, fuelling accusations that crypto miners are profiting at the expense of the state.

Crypto advocates counter that those subsidies are not as generous for miners, who are forced to shell out export rates for electricity and can end up paying 10 times what other industries pay for power during peak months.

The government and the public have also blamed crypto miners for nationwide power outages since 2019.

This latest backlash comes as Iran’s sprawling capital Tehran – home to more than eight million people, swelling to over 12 million when you add in commuters – has been enveloped for the better part of a month in heavy smog that has spread to other cities across the country.

The deterioration in air quality has been attributed to power plants that burn mazut, a heavy, low-quality fuel oil that releases high levels of sulfur dioxide.

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“We don’t want mazut to be consumed at all, but we have no other option,” Oil Minister Bijan Zanganeh admitted in early January, saying Iran’s mazut exports have been affected by US sanctions on the country’s oil industry.

Breathing toxic emissions directly contributes to 3,000 deaths in Tehran and 33,000 across Iran every year, according to the health ministry’s latest estimates in 2018.

Over a period of five days in December, close to 14,000 people across Iran were admitted to emergency rooms due to pollution-related complications, according to Mojtaba Khaledi, a spokesman for the Emergency Services Organization of Iran.

Iran’s electricity grid is experiencing a strain, which experts throughout the years have attributed to a range of fundamental issues, from mismanagement of power plants and old infrastructure that leads to energy waste to exceptionally high consumption levels of natural gas by households.

Earlier this week, President Hassan Rouhani said Iran – which has the second-largest natural gas reserves in the world – consumes more natural gas than 14 European countries in colder climates combined.

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Now Tehran households are experiencing sporadic natural gas outages, too.

Cash-ready industry

Iran has the capacity to produce up to 83,000 megawatts (MW) of electricity at the moment, officials say.

But though a number of officials have blamed cryptocurrency mining for straining the electricity grid, others have contradicted that claim.

Iran’s Minister of Energy Reza Ardakanian said on Tuesday that the country’s electricity usage peaks at 38,000MW per day while total consumption for cryptocurrency mining stands at just above 300MW

“A simple mathematical calculation will tell you what fraction of that huge number this is,” he told reporters, warning to be wary of factions that wish to use this opportunity to sow unrest.

Cryptocurrency and blockchain technologies researcher Hamed Salehi said a lack of transparency by the energy ministry on large crypto mining farms – including how much energy each of them consumes and the type of equipment they use – fuels misinformation and creates a less-than-welcoming climate for an industry that is not under the yoke of US sanctions.

“What would be wrong with foreigners coming into Iran, obtaining all the official permits, and investing money to even build power substations for their [cryptocurrency mining] farms?” he asked Al Jazeera, adding “It would be a win for them, for the government and the people.”

Iran: Bitcoin miners alleged to have caused nationwide power outages

 Iran: Bitcoin miners alleged to have caused nationwide power outages Iran's government blames crypto farms for the ongoing power outages in the country. Hundreds of them have now been shut down and their equipment confiscated during raids. © vanchai tan / Shutterstock.com Iran's capital Tehran is struggling with power outages. Tehran and other Iranian cities have been hit by power outages repeatedly in the past few weeks. The Iranian government blames the mining farms in the country for the blackouts.

“Crypto mining is currently the most cash-ready industry in Iran under sanctions and this is while miners are paying for their electricity at export rates,” Salehi said.

Though the Jomhouri-e Eslami editorial lashed out against “red farms”, there is only one crypto mining farm co-owned by China in the country, Mostfa Rajabi Mashhadi, spokesman for Iran’s power industry, told state television last week.

The farm in question is run by Iran & China Investment Development Group. On January 14, Iranian officials announced that it – along with a number of other Iranian crypto farms – would have power cut for two weeks without prior notice.

Mohammad Hassan Ranjbar, the CEO of Iran & China Investment Development Group, issued a statement condemning the move and the media hype around cryptocurrency mining.

“China is currently the only country that can invest in Iran due to sanctions. It is both wealthy and rich in technology, so we can create the grounds for more investments by helping each other,” he wrote, warning that China could take its business to another country, given mining bitcoin “is profitable anywhere in the world” at its recent valuation.

“They don’t even need to build power substations, are supported by governments and people, and are not sanctioned,” Ranjbar added.

Crackdown on illegal mining

It’s not just crypto farms operating above board that are in the crosshairs.

President Rouhani’s chief of staff Mahmoud Vaezi, who formerly served a four-year term as information and communications technology minister, announced earlier this week that the intelligence ministry will begin investigating illegal cryptocurrency mining operations.

“It would also be false to say the government is using bitcorn,” he said, mispronouncing the name of the world’s biggest cryptocurrency.

Mohammad Hassan Motevalizadeh, CEO of the state-run power company Tavanir, said this week that 45,000 illegal mining devices using 100MW per day have been confiscated recently.

It is estimated that illegal devices that weren’t caught up in the dragnet consume up to 300MW per day, or less than one percent of Iran’s peak power consumption.

It would be vain to say cryptocurrency mining is causing power outages in Iran with all the evidence to the contrary, said a 30-year-old who operates a legal farm with almost 1,000 devices and who asked to remain anonymous due to sensitivities involved.

“The solution to address power outages would be for officials and the energy ministry to develop infrastructures and methods of delivering electricity during peak hours,” he told Al Jazeera, adding that expanding solar and wind-powered stations would be one promising avenue.

“I agree that illegal farms should be dealt with,” researcher Salehi said.

“This is signalling foreigners not to come to Iran because something like this could happen to them at every moment. And it’s wrongly telling the people that crypto mining is for profiteers who waste away public resources.”

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