Iran Suspects Bitcoin Miners May Be Culpable in the Capital’s Frequent Power Outages

Bitcoin mining, while a largely profitable venture for mining companies and individuals, can cause plenty of problems. The rise of crypto mining can raise rates, weaken grids, and even cause power blackouts in certain countries like Thailand, Venezuela, and Kazakhstan.

Bitcoin mining is a notoriously energy-intensive process, and its rise in popularity has led to several problems, including increased electricity rates, weakened power grids, and even blackouts in some countries.

Iran’s capital and its surrounding provinces have been experiencing rolling power blackouts for the past two months, disrupting businesses and residents' daily lives. While several factors could be to blame, local authorities suspect that crypto mining might be playing a significant role.

Tehran’s recent problems with rolling power outages have prompted local officials to raise concerns, calling for an investigation into the potential culpability of crypto miners.

Iran’s increasing demand for power

Iran has been grappling with increasing power demands for a long time, mainly due to the international sanctions imposed on the country over its nuclear program. Moreover, the government has been selling some of its power reserves to boost its budget, which has been strained by regional conflicts and mismanagement.

However, many Iranians have stopped using their air conditioners as the weather improves in the fall to help address the concern.

The country’s rolling power outages coincided with Bitcoin’s massive price surge in early November. After Republican Donald Trump’s election, the price of Bitcoin began to climb rapidly, eventually surpassing $70,000 and reaching the $100k mark for the first to time in the first week of December.

Some local Iranian authorities have suggested that Bitcoin’s price increase and the attention paid to crypto developments in the US might be contributing to the capital's frequent power outages.

Residents and local industries are suffering from power outages

The strain on the country’s power grid has not gone unnoticed by policymakers. Some opportunistic individuals have been taking advantage of the country’s subsidized electricity and other resources for unauthorized crypto mining activities, according to Mostafa Rajabi, CEO of the state-owned power company.

Power outages are a common occurrence in Iran, reflecting the country's failure to meet rising demands and the aging power equipment at its plants. Last summer, industrial parks around the capital city were hit with blackouts, and in October and November, neighborhoods in Tehran faced power outages.

Iran’s Pezeshkian calls for accountability

Faced with regular power outages, Iranian President Masoud Pezeshkian has ordered some plants to stop using mazut, a heavily polluting fuel used extensively in Soviet countries. In the past, Iran has authorized the use of this fuel to address power shortages. Pezeshkian also stated that it is time to provide the public with a fair and transparent account of the current situation.

Electricity in the country is heavily subsidized, which has spurred the growth of crypto mining. These Bitcoin mining facilities require vast amounts of power, draining the country’s reserves.

According to Viraminer CEO Masih Alavi, it is difficult for the government to determine how much power unauthorized mining facilities consume. He noted that these miners use VPNs and rent apartments to conceal their rigs from public view. Alavi stated that these operators distribute the rigs across several flats, making it challenging for authorities to locate them.

Featured image from DALL-E, chart from TradingView