Iran To Lift Ban On Crypto Mining Operations

IRAN TO EASE RESTRICTIONS

Highlights:

  • Iran is set to lift its ban on mining cryptocurrencies and Bitcoin in late September.
  • The Iranian government had banned crypto mining back in May on the pretext of environmental concerns.
  • The government has restarted mining operations because they think Bitcoin and cryptocurrency can play a significant role in the country’s economy.

What did the government announce?

The Iranian government announced in August that it will allow the crypto miners to resume their operations in the last week of September. The government has issued this announcement as they are of the opinion that Bitcoin and other cryptocurrencies will have a great impact on the country’s economy in the future.

The decision was taken by the Iranian power generation organization in August. The government had previously banned the mining operations of Bitcoin and cryptocurrencies in May. This was done to reduce the burden on the power grid during summer months. During summer months, demand for electricity increases especially in the middle-east. People require excess electricity for air conditioners and fans so as to battle the heat.

Cryptocurrency mining has a reputation utilizing unprecedented levels of energy. Many countries including China have banned mining operations due to energy consumption and other ecological factors.

Cryptocurrency miners have been blamed for repeated blackouts in Iran which affected its supply exports to neighboring countries like Afghanistan. A similar situation in China led its government to ban Bitcoin mining in the country in April, 2022.

What was the main reason for the ban?

The government had a system of assigning licenses for mining operations in order to regulate them in an orderly fashion. They handed out limited licenses to miners to conduct their operations. However, it was the illegal mining operations that affected the electricity supply in the country. Unlicensed miners began mining cryptocurrencies in the country, consuming high levels of energy on a daily basis.

In a survey conducted in June, it was found that the Iranian government had handed over 30 crypto mining licenses. However, in the same month, over 7000 people were detained for conducting illegal mining operations. Thus, the government had to resort to a countrywide ban on mining until it could come up with better laws and regulations.

What was Iran’s attitude towards mining in the past?

The Iranian government had started enabling crypto mining in the country in January 2020. The government had issued over a thousand licenses, granting legal permission for people to mine Bitcoin and cryptocurrencies in the country.

It also considered banning the use of foreign-mined cryptocurrencies in Iran so as to encourage local mining and adoption. These discussions were done as the government thought that locally mined cryptocurrencies would enhance and develop their economy.

The country had estimated the mining business to be a billion-dollar revenue project in the country. Thus, the country was keen on keeping local mining operations alive. However, it had to shut down these operations due to the summer energy consumption conditions, thus shattering any hope of the reality of the estimation.

The government is also set to benefit from the resumption of the mining activities due to the taxation policies. Its parliament has come up with various tax slabs on mining and trading activities regarding cryptocurrencies.

Iran
Source: CCN

What are the benefits of lifting the ban?

The lifting of ban on mining operations in Iran will have several benefits in the country:

  • The Iranian government will earn higher revenue from taxes imposed on mining and trading activities.
  • The government’s estimation of the billion-dollar revenue project may come to reality.
  • Miners will reap the benefits of the unban. They will be able to generate revenue from their operations.
  • Miners who lost their jobs due to the ban, will now be able to get their jobs back.
  • The economy will flourish as the government has encouraged local mining operations rather than foreign cryptocurrency.
  • However, the Iranian government has to exercise stricter regulations over the mining operations in order to avoid illegal activities and energy consumption.