The Iranian government has come with a specialized electricity tariff pricing plan for bitcoin mining activities in the country. This solution likely solves the developing issue between crypto miners and Iranian authorities following the recent increase in mining activities in the country.
The move also presents another aspect the Tehran’s drive to regulate the burgeoning virtual currency industry. Crypto critics say mining activities consume far too much electricity despite the availability of evidence to the contrary.
Tehran to Levy Special Tariffs on Bitcoin Mining
According to the Financial Tribune, the Iranian Economic Commission is set to introduce a finalized electricity tariff regime for bitcoin miners in the country. The next step is for the inter-ministerial Cabinet of Iran to approve the new bitcoin mining electricity tariffs for them to become operational in the country.
As at press time, there are no explicit monetary details about the new electricity tariff scheme for bitcoin and crypto mining. Thus, it is difficult to determine the material impact of the new prices on the profitability of bitcoin mining in Iran.
However, there are indications that it might be in line with the already existing price of electricity for export purposes. If the proposed tariff plan mirrors this standard, then Iran’s status as a new haven for bitcoin mining might not be significantly affected.
Commenting on the matter, Homayoon Ha’eri the deputy Energy Minister for Power and Electricity said that electricity prices were variable. According to Ha’eri, several factors such as fuel prices in the Persian Gulf region could determine the final price.
Iran uses a considerable portion of its GDP to subsidize the cost of electricity. The move has become part of Tehran’s efforts to boost internal commerce while trying to attract outside investment in the face of economic turmoil and renewed U.S. sanctions.
A Workable Solution
The introduction of a specialized electricity pricing plan for bitcoin mining might help to settle the brewing conflict between miners and the authorities. As reported by Blockonomi, the Iranian government had in June 2019 demanded that miners pay the full price for their electricity consumption.
In response, many farms decided to set up shop in mosques due to the free electricity that they enjoy. Authorities did storm many mosques, confiscating thousands of crypto mining rigs in the process.
While the new tariff solves one issue, there is also the matter of crypto regulations in the country. According to a senior central bank official, Nasser Hakimi, bitcoin trading is illegal in Iran.
At the start of the year, there were also reports of the central bank issuing draft cryptocurrency regulations. Meanwhile, the country’s apex bank is in the process of utilizing blockchain technology to upscale the banking and finance sector in the country.
Areatak — a Tehran-based blockchain firm, is helping the central bank create a blockchain system dubbed ‘Borna.’ When fully realized, Borna will be the new home of the country’s financial infrastructure. Areatak is developing Borna based on the Hyperledger Fabric implementation developed by the Linux Foundation.
Bitcoin Mining and Electricity Consumption
The creation of a new electricity tariff for bitcoin mining in Iran also brings up the question of the power consumed by crypto miners. From counties in the U.S. to provinces in Canada, government authorities have called for miners to pay higher premiums on electricity consumption.
In late 2018, the Norwegian government even canceled its electricity subsidy to bitcoin miners. Critics say crypto mining operations are energy-intensive activities.
However, there is evidence to show that more than 74% of crypto mining utilizes renewable energy. Mining farms are reportedly being set up in remote locations to utilize cheap, clean energy.