The government of Iran has officially legitimized cryptocurrency mining as industrial activity in the country, according to reports from Mehr News Agency. Per the report, the decision was taken during a Sunday cabinet session chaired by Iran’s President Hassan Rouhani.
Henceforth, cryptocurrency miners will be required to acquire a license from Iran’s Ministry of Industry, Mines, and Trade.
However, miners are implored to note that cryptocurrency mining is still a taxable activity, except the virtual currencies are sent abroad and the revenues are redirected to the development of Iran’s economy.
Moreover, cryptocurrencies are still rated illegal in Iran, and are outlawed as modes of payment or transactions.
Iran’s mining-friendly government is still crypto-phobic, and still warns citizens who buy cryptocurrencies of the risks associated with the holding, handling and transacting of such, with the emphasis that banks will not give guarantees in case of losses.
The go-ahead from the Iranian cabinet followed a government committee greenlight for cryptocurrency mining, as revealed by the governor of the Central Bank of Iran, Abdolnaser Hemmati, on July 21:
“A mechanism to mine digital coins was approved by the government’s economic commission and will later be put to discussion at a cabinet meeting.”
Crypto Mining Is Iran’s Weapon
According to the Mehr News report, the legal approval of the mining industry in Iran is an optimistic sign for many cryptocurrency experts and maybe the first step towards the legalization of cryptocurrencies in Iran.
Iran could soon be a flourishing hub for cryptocurrency exchanges and other crypto-entities. Besides, the mining sector has proved very useful in circumventing the crippling economic crises that the United States’ sanctions have plunged the country into.
Considering that Iran already has the basic resource for mining, cheap electricity, it is a wise move to save its dipping economy from extinction. Iran is currently one of the cheapest countries in which to mine cryptocurrency, because of the generous subsidies granted to the power sector in the country.
In 2017 alone, the country had to spend $45.1 billion on energy subsidies, an amount that accounted for about 10 percent of its annual GDP for that year. Per Global Petrol Prices, the cost of electricity per kilowatt-hour in Iran as of March was $0.03 across the board, a rate that is far lower than the global average at the time – $0.15 per kWh- and only rivaled by that of Burma.
Iran’s low electricity rates have attracted crypto miners from all parts of the world, including China. However, it is to be expected that the rates will spike after this legalization, because cryptocurrency miners will likely be charged a higher rate than regular electricity users.
According to Mehr News Agency, the Iranian government intends to raise electricity prices for cryptocurrency miners to $0.07 per kWh, and that’s still relatively low.
We Can All Borrow A Leaf From Iran’s Books
Iran’s pro-crypto switch, at least towards mining, is something that the rest of the crypto world has to learn a lesson or two from. The authorities apparently went from viewing the sector as a threat to leveraging on the turn-around that it could mean for their economy.
In June, the Iranian Energy Minister called for subsidies to be lifted off the energy used by cryptocurrency miners in Iran. The government frowned on the sector and labeled them an energy-draining, environment-polluting sector.
It only took a willingness to look at it all from another angle, and now in July, the government is smiling and shaking hands with crypto miners, figuratively.
It remains to be seen whether the U.S. government will now take steps to enforce sanctions against Iranian mining. American strategists now have to deal with a much more powerful adversary, as Iran will now be solidly backed by the influence of its considerable mining sector.