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Iranian government draft new rules to control illegal use of subsidized energy in crypto mining

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Apr, 22 2022

Apr, 22 2022

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According to a report published by Iran's IRNA news agency, the Iranian government is drafting new rules raising penalties including additional fines and imprisonment to restrict the use of subsidized energy in crypto mining. This step was taken to control illegal cryptocurrency mining in the country.

Due to energy shortages faced in recent years, the Iranian government started focussing on tightening mining regulations. Mining cryptocurrencies with subsidized electricity intended for household, industrial, agricultural, and commercial subscribers is prohibited. The use of subsidized energy in crypto mining may lead to an increase in penalties for mining operators as per the Iranian government’s planning. There will be raising fines by at least three and at most five times, imprisoning the offender, and revoking the offender’s business license will be included in increased penalties rules.

On 16th April the country’s Power Generation, Distribution, and Transmission company, the Tehran Times reported, about the Iranian government's plans to enhance the fines rates enormously for the mining operators who use subsidized electricity. The company's representative Mohammad Khodadadi Bohlouli specified: “Any use of subsidized electricity, intended for households, industrial, agricultural and commercial subscribers, for mining cryptocurrency is prohibited.”

In Iran, since 2019 cryptocurrency mining operations are considered legal and were in licensing process. Ministry of Industry, Mining and Trade issued more than 1,000 mining licenses as per record in January 2020. In May 2021 Iran’s President Hasan Rouhani announced a temporary moratorium on crypto mining as the nation's energy grid had to face many challenges like drought and reduced rainfall. It was this cycle that repeated itself in December 2021 when the moratorium was lifted and then reinstated.

In May 2021, a spokesman for the Iranian Energy Ministry, Mostafa Rajabi Mashhadi, said unauthorized mining of cryptocurrencies causes electricity supply problems as it damages transformers and the local power grid.

Last year in the month of September as per the report, authorities confiscated over 220,000 mining machines and closed nearly 6,000 illegal crypto mining farms across the country. In the month of December, orders were issued to crypto miners to shut down operations to prevent winter blackouts.

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Indrani bose

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