Is Iran's Bitcoin mining cost only $1300? Over 95% of mining rigs operate illegally!

Recently, a piece of news about the cost of mining one Bitcoin in Iran being only $1,300 has sparked heated discussions in the crypto community. Meanwhile, the market price of Bitcoin once soared to over $100,000. Such an astonishing profit margin has led many to look at this Middle Eastern country with curiosity and even longing. However, behind this enticing picture lies a complex reality woven together by energy subsidies, large-scale illegal activities, and strong government regulation. Iran is deeply embroiled in an energy and legal storm surrounding crypto mining, with reports suggesting that over 95% of the country's mining equipment operates illegally outside the legal gray area.

Illegal Miner Paradise

The reason why Iran has become a “holy land” for global crypto mining is primarily due to the country's long-standing policy of low electricity prices. The Iranian government has provided substantial financial subsidies for electricity to stabilize people's livelihoods and support industrial development, resulting in extremely low electricity costs in the country compared to the global average. Akbar Hasan Beklou, the CEO of the Tehran Power Company, has stated candidly that it is this subsidy policy that has inadvertently turned Iran into a “paradise for illegal miners.”

According to a report released by the organization CoinLaw in June this year, Iran has quietly risen to fifth place in the global Bitcoin (BTC) hash rate distribution, contributing about 4.2% of the total network's computing power, only behind the United States, Kazakhstan, Russia, and Canada. This data fully demonstrates Iran's important position in the global crypto mining landscape. Low costs mean huge potential profits, and this strong economic incentive has attracted countless speculators to flood into this industry.

However, this “paradise” like scene only belongs to those illegal miners who walk on the edge of the law. In order to maximize profits, they try every means to evade the high electricity prices set for legal crypto mining. The most common tactic is to disguise the power-hungry mining equipment as ordinary industrial facilities or agricultural projects, thereby stealing access to industrial or agricultural electricity that enjoys higher subsidies. This behavior of selling dog meat under the guise of sheep's head allows them to conduct high-intensity mining 24/7 at extremely low costs.

When the exorbitant profits of a few are built on the occupation of the country's public resources, the consequences are catastrophic. According to official estimates, there are currently about 427,000 crypto mining devices operating across Iran, of which over 95% (about 405,000) belong to unauthorized illegal facilities. These clusters of mining machines hidden in the shadows constitute a massive underground power consumption network.

According to Beclu, the total amount of electricity consumed by these unlicensed mining farms around the clock exceeds 1,400 megawatts (MW). This is an astonishing figure that places severe pressure on Iran's already fragile national power grid. During the summer peak electricity usage period, this additional massive burden often leads to nationwide power shortages and frequent blackouts, severely impacting the daily lives of ordinary people, the operation of public services, and the production of legitimate industries, threatening the stability of the entire country's power supply. It can be said that illegal mining activities are pursuing private interests at the expense of the overall national interest.

Comprehensive Encirclement Operation

In the face of the increasingly uncontrollable illegal mining chaos and its threat to national energy security, the Iranian government has significantly strengthened law enforcement efforts in recent years and launched a nationwide crackdown.

In the capital province of Tehran alone, authorities have successfully shut down 104 unauthorized illegal mining sites and confiscated 1,465 professional mining machines. It is estimated that the total power consumption of these confiscated devices is equivalent to the daily electricity consumption of nearly 10,000 ordinary households, indicating the scale of the operation.

In order to enhance enforcement efficiency, government departments have designated several “hot areas” where illegal mining activities are most rampant, including Pakdasht, Malard, and Shahre Qods in Tehran Province, as well as some old industrial zones in the southwest. Law enforcement officials discovered that illegal miners employed all kinds of concealment methods. In addition to using industrial buildings as cover, some mining sites were even cleverly hidden in underground tunnels in remote areas, attempting to evade detection.

To tackle this challenge, the Iranian government has formed a dedicated inspection team and has closely collaborated with national law enforcement units (police forces) to jointly carry out the task of dismantling illegal facilities. This inter-departmental cooperative effort demonstrates the government's strong determination to eradicate illegal mining.

In addition to using the coercive power of the state, the Iranian government has also cleverly employed economic incentives in an attempt to launch a “nationwide mobilization” campaign. To gather clues more broadly, Mostafa Rajabi Mashhadi, the CEO of Iran's state-owned electricity company Tavanir, announced in August this year that cash rewards would be offered to citizens who report illegal crypto mining activities.

According to the policy, any citizen who successfully reports an illegal mining device in operation can receive a reward of 1,000,000 tomans (approximately 24 USD) after verification. Although the amount of the reward for each case is not high, considering that the number of devices at illegal mines is often in the hundreds or thousands, this measure still has a certain appeal for those in the know. This initiative aims to leverage the power of social supervision to establish a nationwide intelligence network, leaving illegal miners nowhere to hide.

Conclusion

In summary, the rumor that Iran's mining costs are as low as $1300 is more of a prelude to revealing deeper issues. It reflects a severe conflict between a country's energy policy, the globally emerging industry, and local illegal activities. On one hand, cheap electricity gives Iran the potential to become a global computing power center; on the other hand, the rampant illegal activities spawned by this are seriously eroding its national foundation. The Iranian government's current strategy of combining strict crackdowns with nationwide reporting indicates that it can no longer tolerate this disorderly state.

In the future, where will Iran's crypto mining industry head? Will it be “tamed” through a more reasonable regulatory framework, making it a legitimate growth point for the economy, or will it be completely eliminated with a tougher stance? This game surrounding Bitcoin and electricity will continue to unfold. For global miners, Iran may no longer be that “paradise” where one can easily strike gold, but rather a market filled with variables and risks.