Iran goes after bitcoin farms as power blackouts intensify

Authorities launched a crackdown on bitcoin processing centres which use huge amounts of electricity following a series of power outages across the country

But miners say the decision to close down bitcoin farms operating legally seems designed to deflect concerns about Iran’s repeated blackouts

4-MIN READ4-MIN

Cars drive on an unlit street during a blackout in Tehran on January 20. Photo: AP

Published: 7:26pm, 22 Jan 2021Updated: 7:26pm, 22 Jan 2021

Iran’s capital and major cities plunged into darkness in recent weeks as rolling outages left millions without electricity for hours. Traffic lights died. Offices went dark. Online classes stopped.

With toxic smog blanketing Tehran skies and the country buckling under the pandemic and other mounting crises, social media has been rife with speculation. Soon, fingers pointed at an unlikely culprit: Bitcoin.

Within days, as frustration spread among residents, the government launched a wide-ranging crackdown on bitcoin processing centres, which require immense amounts of electricity to power their specialised computers and to keep them cool – a burden on Iran’s power grid.

Authorities closed 1,600 centres across the country, including, for the first time, those legally authorised to operate. As the latest in a series of conflicting government moves, the clampdown stirred confusion in the cryptocurrency industry – and suspicion that bitcoin had become a useful scapegoat for the nation’s deeper-rooted problems.

Since former US President Donald Trump unilaterally withdrew in 2018 from Tehran’s nuclear accord with world powers and reimposed sanctions on Iran, cryptocurrency has surged in popularity in the Islamic republic.

For Iran, anonymous online transactions made in cryptocurrencies allow individuals and companies to bypass banking sanctions that have crippled the economy. Bitcoin offers an alternative to cash printed by sovereign governments and central banks – and in the case of Iran and other countries under sanctions like Venezuela, a more stable place to park money than the local currency.