Iran’s government is looking to provide tax breaks for bitcoin miners in the country. This move is the latest in a series of steps geared towards supporting the local crypto industry as a way of boosting the country’s economy.
Meanwhile, bitcoin mining continues to see increased activity as the network hash rate approaches unprecedented levels. Participants in the market are even expanding their outlay with numerous data centers going live across the globe.
Iranian Bitcoin Miners in Line for Tax Break
According to Iranian English news platform Financial Tribune, the country is set to offer tax holidays to bitcoin mining firms. Iran’s National Tax Administration (INTA) says that bitcoin miners who repatriate their foreign earnings will be eligible for tax exemptions.
Usually, repatriating offshore earnings (converting overseas revenue into the local currency of the country where the company is based) comes with a significant corporate tax burden. For this reason, many companies elect not to repatriate their foreign revenue.
As previously reported by Blockonomi, Iran’s government classifies cryptocurrency mining as an industrial activity. Thus, bitcoin miners in the country have to pay federal taxes.
The move to provide tax breaks in exchange for repatriated overseas earnings might constitute a significant stimulus for Iran’s fiat currency. Tehran has struggled with capital control policies amid a weakening economy and the return of U.S. sanctions.
Iranian bitcoin miners, however, believe that the government shouldn’t have to worry about capital flight from their activities because 70% of their revenue ends being used to cover production costs.
Tehran Looking to Support Cryptocurrency Mining
In recent times, authorities in Tehran seem to have stopped short of legalizing cryptocurrency as a whole in the country. The government has legalized cryptocurrency mining, creating a special electricity tariff for the activity.
Iran’s electricity tariff is highly subsidized being more than 80% lower than the global average. Thus, bitcoin miners continue to flock into the country in search of cheap electricity. Even with the creation of a separate fee structure for cryptocurrency miners, the charges might still be significantly lower than in other countries where bitcoin mining is popular.
Such is the extent of the increase in Iranian crypto mining activity that it decreased the global utilization of renewable energy in bitcoin mining. Data from Coinshares report saw a slight drop in this regard. Iran’s electricity generation is mostly from fossil fuel sourced from the country’s large oil deposits.
While the government is encouraging bitcoin mining, cryptocurrencies themselves are still outlawed in the country. Citizens cannot use bitcoin and other digital coins are a means of payment.
Also, mining companies can only sell mined cryptos on overseas exchanges. For Iranian authorities, encouraging crypto commerce could further dilute capital control efforts.
Bitcoin Mining Activity Continues to Increase
Meanwhile, bitcoin mining activity continues to increase with the blockchain network hash rate setting new all-time highs. The Bitcoin Network hash rate is almost at 100 quintillion hashes per second. Hash rate refers to the computing power used to secure the blockchain network.
To put things into perspective, Bitcoin’s current hash rate exceeds the approximate total number of grains of sand on the earth by more than 10 times. Companies like Northern Bitcoin are also expanding their financial outlay in the market, establishing new data centers.
The emphasis continues to be on sustainable bitcoin mining using renewable energy sources. Reports say mining centers are becoming a buyer of last resort for clean energy.