There is no pressure like economic pressure. Iranians are definitely feeling how US sanctions can strain their economy. US sanctions include lucrative oil export and unlike before, uncle Sam is not allowing any countries to get an exemption for oil imports. On the other hand, the Iranian regime was cracking down on cryptocurrency mining operations.
It seemed like the only hope Iranians had to overcome the sanctions – through cryptocurrency – was too liberalizing for the Islamic regime, Until now. It looks like the crypto winds are changing in Iran due to the enormous economic pressure stemming from US sanctions.
A Change in Heart?
The Iranian government is apparently shifting from a zero-tolerance policy regarding cryptocurrency mining, to a more nuanced approach. Cryptocurrency enthusiasts have little to celebrate following this sudden change of heart; the Islamic regime is merely showing some pragmatism following the dire economic situation in Iran.
Here is how the Iranian government is going from cracking down on cryptocurrency mining to taking advantage of Bitcoin and other cryptocurrencies to circumvent US sanctions, according to a report from Mehr News:
- The ministry of Industry, Mine and Trade will be responsible for regulating cryptocurrency mining and granting licenses.
- Cryptocurrency will only be available for use in international transactions. Domestic cryptocurrency transactions will remain illegal.
- Cryptocurrency mining is taxable and will be subject to tax exemptions only if it is exported with the proceeds being declared to the government.
Cryptocurrency Mining in Iran
These measures make sense for the regime, but do not give any advantage to the average Iranian citizen. Cryptocurrency mining, especially Bitcoin mining, is an expensive endeavor. Only corporations with enough financial backing, foreign citizens or companies, and wealthy Iranians might be able to acquire the hardware needed to mine.
Furthermore, processing permits from a government entity that puts its survival above the wellbeing of the citizens it should protect, might place another barrier to access for the average Iranian who might be interested in running one or two ASICs from their home.
Therefore, the average Iranian is not likely to benefit from low electricity costs to put food on the table. Corporations and wealthy individuals are more likely to exploit their government connections and use their financial leverage to set up sizeable cryptocurrency mining operations.
Considering that the price per kilowatt hour in Teheran is close to $0.02 USD, many Iranians could easily run some kind of artisanal cryptocurrency mining operation profitably. Instead, the government is planning to set electricity prices for licensed mining farms at $0.07 USD per kilowatt hour.
The Truth About Ayatollah-Regulated Cryptocurrency Mining
Here is exactly where the Islamic regime that governs Iran will find its way to circumvent US sanctions for its own profit. Given that resource rich Iran cannot export the 2.5 million barrels of oil per day it produces along with its natural gas, the country is awash with cheap energy.
The best way to take advantage of this is to turn it into electricity, and charge foreigners who want to set up cryptocurrency mining farms in the country, 250% more for electricity. With this move, Iran will be able to export its energy by other means, at least in theory.
All that revenue will go straight into government coffers to shore up the regime. In all likelihood, most Iranians will not see a penny. The average Iranian, however, will still be subject to draconian laws limiting their financial freedoms. If they manage to set up an ASIC in their basement, the government is likely to come knocking on the door.
If they manage to keep regulators at bay, they will not be able to spend their coins locally. Therefore, the cryptocurrency revolution will remain an integral part of the black markets in the country, just like alcohol and anything else the Islamic regime that runs Iran considers “Haram.”