In light of the ongoing power shortages in Iran, the Iranian government has announced a reward scheme for individuals who report illegal crypto mining operations.

Illegal Crypto Mining Strains Power Grid, Says Tavanir CEO Mostafa Rajabi Mashhadi

Mostafa Rajabi Mashhadi, the CEO of Tavanir, Iran's state-run electricity firm, has highlighted the detrimental effects of illegal cryptocurrency mining on the national power grid. These unauthorized operations tap into subsidized electricity and overload public networks.

"Unauthorized cryptocurrency mining has significantly increased electricity demand, leading to widespread disruptions across the power grid," stated Mashhadi. He disclosed that investigations have unearthed 230,000 illicit crypto-mining rigs consuming up to 900 megawatts of power—equivalent to the energy usage of an entire Iranian province home to 1.4 million people.

Illegal Crypto Operations Worsen Power Woes

Illegal mining activities have spread to locations such as schools and mosques, exploiting free or heavily subsidized power. These revelations come as Iranian authorities intensify efforts to safeguard the nation's power infrastructure against such unauthorized uses.

Cryptocurrency mining involves extensive energy use and computing resources to solve complex cryptographic challenges, typically rewarding miners in Bitcoin. Despite the substantial energy demands, the profitability of mining has declined, especially following the Bitcoin reward halving in April, which reduced mining incentives by 50%.

In response, some miners, particularly in the United States, are shifting towards artificial intelligence projects to maintain their profitability. Notably, Venezuela has also prohibited crypto mining to preserve its power grid from excessive energy consumption.

Despite legalizing cryptocurrency mining in 2019 and issuing over 1,000 licenses to boost the economy amidst heavy sanctions, Iran has seen a decrease in its global Bitcoin mining share. This is primarily due to power shortages that have forced the government to suspend mining activities periodically. As reported by the Cambridge Centre for Alternative Finance (CCAF), Iran now contributes just 0.2% to the global Bitcoin hash rate, a stark decline from 7% in 2021.

Moreover, the ongoing issue of illegal mining continues to draw regulatory attention, with Iranian police confiscating 7,000 mining computers from an illicit operation in June 2021, as per a Reuters report.