Iran Removes Subsidy for Crypto Miners
The Deputy Minister for Energy, Homayoun Haeri, stated that cryptocurrency miners in Iran will no longer have access to the country’s electricity subsidy, and must pay the full cost to run miners, as reported by Financial Tribune on June 10, 2019.
Iran has been facing economic and political turmoil since American President Donald Trump invoked economic sanctions and pulled out of the nuclear pact that restricted Iran’s nuclear development plans in return for access to free trade.
The depreciation of the Rial has been another a focal point of the economic downturn, leading to the standard of living to decline in the country.
Iran’s cryptocurrency miners continued to find profitable opportunities in light of rapid currency depreciation, making it an attractive investment outlet and even being declared an official industry by the government. As Iranian authorities subsidize electricity, citizens abuse the cheap power despite the government’s warning to reduce consumption.
As such, this electrical subsidy will no longer be available for cryptocurrency miners, forcing them to pay the direct cost of electricity.
The cost of mining cryptocurrency in Iran is bound to shoot up, putting many inefficient miners out of business. While the country enjoys an abundance of sun and could be a hotbed for solar energy, their reliance and natural monopoly over oil and fossil fuels negates the possibility of solar-powered mining in the country.
Iranian miners may be forced into involuntary capital expenditure to procure more efficient mining rigs. The government’s decision is reasonable, given the state of their economy and the degree of subsidy they offer. Mining on proof of work coins like bitcoin and ether consumes a lot of energy and resources.
How Cryptocurrency Is Helping Iran
With American sanctions over Iran and the EU trying to salvage the nuclear pact, Iran has been unable to access global finance in the way they were once able to. People sending money to their family in Iran are unable to do so because of the banking sanctions on Iranian accounts.
Bitcoin, as a stateless payment protocol, can circumvent these sanctions, allowing people to send money to countries despite global sanctions. With each passing day, the world is witnessing additional evidence as to why such a technology can be so revolutionary.