Bitcoin has promised many things for Iran, not least a route to bypass U.S. sanctions, but now it threatens to be a source of problems rather than solutions. According to local media reports, the Iranian government is blaming bitcoin miners for a potentially unsustainable surge in electricity use. Mostafa Rajabi Mashhadi, a spokesman for the Energy Ministry, has been quoted by Iranian news agencies as saying that electricity consumption increased by 7% in the past month alone and he was clear where the blame lay. “A bulk of that unusual increase is because of the activity of bitcoin miners,” he said, adding that their activities are “making the grid unstable and causing problem for other users.” The cryptocurrency uses large amounts of energy because of the way the underlying system has been set up. People are incentivised to provide computing power for the network in order to verify transactions with the promise of bitcoins as a reward. However, that process of verification and reward – which is known as the “mining” of bitcoins – is getting more complex and requires large amounts of power. At the moment, the cost of mining each bitcoin in Iran is equivalent to the power used by 24 Iranian homes over an entire year. Bitcoin miners in Iran are believed to be basing their operations in locations with access to subsidised electricity, such as factories, agricultural sites, government offices and mosques. The low cost of electricity has reportedly attracted operators from around the world, including Armenia, France and Ukraine. Electricity subsidies are said to cost the Iranian government some $1 billion a year, a burden which the state can ill-afford at this time. With the economy struggling under debilitating sanctions, which are getting worse on almost a daily basis, the government is now looking for ways to clamp down on the power-hungry cryptocurrency miners. “Bitcoin miners will be identified and their electricity will be cut,” said Mashhadi. Globally, bitcoin mining is proving to be a huge consumer of electricity. According to one estimate, the industry now uses 68 terawatt hours (TWh) a year, the same as the usage of entire mid-sized economies such as Colombia and Switzerland. The lure of bitcoins has drawn miners to other unusual corners of the Middle East and North Africa. In August last year, New York-based Soluna Technologies announced plans for a project combining renewable energy and blockchain computing in the disputed territory of Western Sahara.
Iran 's energy ministry has warned that a surge in bitcoin mining is threatening the sustainability of the country 's electricity grid . Ministry spokesperson Mostafa bin Mashhadi said prices had risen 7 % in the past month , jeopardising the sustainability of the system . Using mining has been cited as a potential way of circumventing economic sanctions placed on Iran . Miners are reportedly targeting locations that have subsidised electricity , such as factories , government offices and schools .