But this time, government officials say that bitcoin mining at cryptocurrency farms — the energy-intensive business of using large collections of computers to verify digital coin transactions — is partly to blame.
Iran’s state-owned electricity firm Tanavir announced Wednesday that it had shut down a large Chinese-Iranian-run cybercurrency center in the southeastern province of Kerman because of its heavy energy consumption. The company reportedly was licensed to operate under a process the government had put in place to regulate the industry.
Alongside pointing a figure at legal operations, Iranian officials have specifically singled out illegal cryptocurrency miners as a strain on the electricity grid spurring outages, Mostafa Rajabi Mashhadi, a spokesperson for the electricity industry at Iran’s energy ministry, told the IRNA state-run news agency. On Wednesday, Ali Vaezi, a spokesperson for Iranian President Hassan Rouhani, said the government would be investigating cases of unlicensed cryptocurrency farms.
But Iranians in the bitcoin industry reject the government’s accusations, saying the industry is being blamed for a broader problem.
“The miners have nothing to do with the blackouts,” Ziya Sadr, a cryptocurrency researcher in Tehran, told The Washington Post. “Mining is a very small percentage of the overall electricity capacity in Iran.”
He added, “It is a known fact that the mismanagement and the very terrible situation of the electricity grid in Iran and the outdated equipment of power plants in Iran can’t support the grid.”
The government itself has pointed to cheap electricity rates, enabled by government subsidies, as another major cause of the blackouts. A member of the board of the Iranian Blockchain Association told IRNA that the electricity used by cybercurrency miners in Iran was estimated to be about equal to the electricity lost by the network during distribution.
The standoff underscores the rocky road ahead for cryptocurrencies that, in theory, could thrive in an economically embattled country such as Iran, where some have welcomed the alternative banking system as a possible way to bypass U.S. sanctions.
And in the meantime, electricity problems persist. In recent days, overstretched power plants have shut down as demand for natural gas to heat homes has soared. Others have reportedly turned to low-grade fuel to keep the strained electricity grid powered. Pollution levels in the capital, Tehran, have hit “very dangerous” levels.
When the lights are working, Iran’s combination of cheap electricity and high inflation has made it an ideal destination for the energy-intensive process of creating, or mining, digital currencies like bitcoin, said crypto expert Ali Beikverdi.
Decentralized cryptocurrencies rely on high-powered computers to verify that transactions are legitimate by solving complicated mathematical problems. Mining units of digital coins is a potentially lucrative business…
Go to the news source: Massive blackouts have hit Iran. The government is blaming bitcoin mining.