As power outages and police raids plague Iran’s burgeoning bitcoin mining industry, a match between a permitless currency and an inflation-choked country that once seemed a perfect fit is now being challenged.
As Cointelegraph previously reported, Iran is joining Pakistan as a cryptocurrency superpower in the Middle East, thanks in part to cheap, heavily subsidized electricity prices, as well as a surge in activity following approval of bitcoin mining as an “industrial activity” for Pakistan in power plants 2020. It is estimated that well over 1,000 legal entities are currently active in the mining industry.
However, the brief history of cryptocurrency mining in the country has not always been rosy. Authorities have closed at least a thousand illegal farms in the past few months, and spot prices for Bitcoin have been mispriced relative to the rest of the world due to high demand in due course as investors flee the rapidly inflating rial.
Now, another source of friction has emerged as the country has experienced frequent blackouts in large population centers.
On January 16, several outlets reported that Iran had suffered power outages in most of the country. However, social media reports have shown that power was incomplete both before and after the outage on the 16th, due to power outages in several cities over the past two weeks.
Authorities were quick to blame Bitcoin mining for the outages and publicize police raids against illegal mining operations, but some experts believe the government is simply looking for excuses for a long-decaying power grid.
In an interview with the Associated Press Thursday, Iran’s former deputy head of the Environment Ministry, Kaveh Madani, said Bitcoin was an “easy victim” and that “decades” of administrative mismanagement were a more likely root cause.
While retail may act as a scapegoat for the government right now, it is clear that authorities are not turning their backs on cryptocurrency entirely. Bitcoin was still being used last month to facilitate import payments from Venezuela.
While the relationship may be rocky at the moment, this certainly doesn’t seem like the end of Bitcoin in Iran.