Jul 07, 2020 14:36 UTC
  •  As crypto fever grips Iran, government rolls up sleeves

Iran is cranking up pressure on illegal crypto mining, requiring digital currency miners to register their rigs with the government.

The directive announced by Vice President Es’haq Jahangiri is the latest measure by the government to put an end to a cat-and-mouse game with illegal crypto miners who smuggle in machines. 

Under the directive, miners will have to disclose their identities, the size of their mining farms and their mining equipment type with the Ministry of Industry, Mine and Trade.

They will have a month to register their equipment, according to the ministry, which will then publish a list of licensed mining centers.

Iran has been trying its hand in cryptocurrencies for quite some time, but there is still regulatory uncertainty over the future of digital transactions within the country.

The government’s conflicting mining policies, tariffs and laws have created confusion among crypto miners and left miners in a gray zone for years.

Officials said the new directive announced Monday aims to “eliminate the confusion of cryptocurrency activities”.

The directive will give the government tighter control over miners, though it remains to be seen how much of the underground community will heed it.

According to Digital Currency Group, Iranian miners contributed nearly 4% of bitcoin’s hashrate in April.

In April, Iranian media reports said iMiner, a cryptocurrency company registered in Turkey, had been granted a license to mine digital coins and offer trading and custody services in Iran.

According to Tabnak news website, the bitcoin mining farm set up by iMiner with 311 billion rials ($7.3 million) of investment is the biggest in Iran, where 6,000 machines will be producing cryptocurrencies.

Sanctions busting factor 

Despite its initial qualms, the government has been warming to cryptocurrencies to support international trade at a time when draconian US sanctions are sealing Iran off from the global financial system. In August 2019, the cabinet issued a regulation that recognized digital mining as a legal sector in the economy.

Under US pressures, the global banking network SWIFT has dropped Iran from its platform, making international financial settlements with the country almost impossible.

Blockchain and other digital ledgers holding cryptocurrency records process transactions without being controlled by any person or entity.

Bitcoin is now increasingly used by the Iranian government and public and cryptocurrency mining activity is accelerating, generating a rising army of miners who are lured by the cheap cost of electricity and the devaluation of the Iranian rial.

Bitcoin mining consumes large quantities of energy because it uses costly software to solve complex math puzzles to validate transactions in the cryptocurrency. The first miner to solve the problem is rewarded in bitcoin and the transaction is added to the blockchain or digital ledger.

However, the murky aspects of the crypto world which provide a backchannel to moving money out of the country have prompted the government to batten down the hatches.