Reuters/EmailNewswire/LON – According to a new study, Iran is home to about 4.5 percent of the world’s bitcoin mining operations, generating hundreds of millions of dollars in cryptocurrency that can be used to pay for imports and lessen the impact of sanctions.
According to Elliptic’s blockchain analytics, if Iran continues to mine bitcoins at its current rate, it will bring in revenues close to $1 billion a year.
No one from the Iranian government could be reached for comment right away.
With the exception of oil, banking, and shipping, all imports from Iran are prohibited by the United States’ near-total economic embargo.
Despite the fact that exact figures are “very difficult to determine,” Elliptic’s estimates are based on data collected from bitcoin miners by the Cambridge Centre for Alternative Finance until April 2020 and statements made by Iran’s state-controlled power generation company in January that up to 600 MW of electricity was consumed by miners.
Powerful computers compete to solve complex mathematical problems in order to generate Bitcoin and other cryptocurrencies. This is an energy-intensive process that frequently makes use of electricity generated from Iran’s abundant supply of fossil fuels.
In spite of the country’s central bank’s ban on foreign-mined cryptocurrencies, local media reports say they are widely available on the black market.
The Iranian government has recently recognised crypto mining as an industry, providing it with cheap electricity and requiring miners to sell their extracted bitcoins to the central bank. More miners, particularly those from China, have come to the country because of the promise of low-cost power. Teheran permits the use of Iranian-mined cryptocurrencies to pay for authorised imports.
A shortage of hard currency, but a surplus of oil and natural gas, has led Iran to recognise that bitcoin mining represents an attractive opportunity.
Miners in Iran use about 10 million barrels of crude oil a year to generate the electricity they need, which accounts for about 4% of Iranian oil exports in 2020.
Using Bitcoin mining to get around trade restrictions, the Iranian government is effectively selling its energy reserves on the global market, according to the study.
Sanctions against payments made through Iranian financial institutions can be circumvented by paying Iranian miners directly in Bitcoin.
Companies offering cryptocurrency services, particularly in the United States, should consider the sanctions they may be subject to as a result of Iranian bitcoin mining, according to Elliptic.
(Anna Irrera contributed reporting; Dubai Newsroom also contributed; Rachel Armstrong and William Maclean edited the piece.)