Iran fears power cuts caused by giant bitcoin farms

Published on : 10/12/2021 – 09:59

Iranians exasperated by the sudden shutdown of their air conditioning when thermometers approached 50 ° C, a dark operating room during surgery… Power outages have multiplied this summer in Iran, causing chain incidents. In question, an overconsumption of electricity caused by cryptocurrency farms which aroused the anger of the population.

A bad scenario that could repeat itself this winter, alerted the public electricity distribution company on Sunday, October 10. At least “10% of power outages this winter” could be caused by “the use of illegal mining machines,” the energy supplier warned. Indeed, the Iranian authorities re-authorized cryptocurrency mining in mid-September, after banning this energy-intensive practice in mid-May.

The craze for bitcoins, and the soaring price of this virtual currency have for several years led to the multiplication of “mining operations” aimed at obtaining these precious bitcoins. Because in addition to the purchase of bitcoins on exchange platforms using traditional currencies such as the dollar or the euro, it is possible to earn bitcoins by “mining”, an operation which consists in solving computer puzzles at the same time. using very powerful computers. These thousands of machines and their cooling systems are grouped together in very expensive “bitcoin farms”.

Iran is one of the first countries to have legalized the “mining” of bitcoins from September 2018, on condition that those who manufacture it obtain prior authorization from the authorities. As a backdrop, cryptocurrency transfers, which escape the international sanctions system, are a way for Iran to mitigate the effects of U.S. sanctions choking the Iranian economy, officials say.

Chinese investors manufacture their bitcoins in Iran

Tempted by the advantageous tariffs of electricity in the country, foreign companies, including Chinese companies, have flocked to Iran, to extract bitcoins there

It is in the light of repeated power cuts that most Iranians have discovered that the most consuming farms were run by Chinese investors, as evidenced by an Iranian businessman in the field of new technologies, interviewed there a few months by France 24 Observers.

“The first time we heard about the presence of Chinese investors in this industry in Iran was when there was a wave of power cuts in January 2020. (…) we knew was that Iranian investors who had close ties to the government, government business partners or even the military had bitcoin farms. For example, I know one near Shiraz. They don’t. they don’t even buy electricity from the government anymore, and they’ve built their own power station, “said the bitter entrepreneur, who recently tried unsuccessfully to set up his own bitcoin farm in Iran.

The largest of these Iranian bitcoin farms is owned by the Chinese company RHY. It is located near Rafsanjan, a town in the province of Kerman, in the south-east of the country. An investigation conducted by the editorial staff of France 24 Observers in January had made it possible to learn more about its operation. And according to RHY, the site consumes 175 megawatt hours (MWh), the equivalent of the electricity costs of a town of 30,000 people or a fifth of the electricity of Rafsanjan, the nearest town.

Consumption of a city of 100 000 residents

Iranian authorities claim that there are no less than 14 legal bitcoin farms, without specifying who owns them. In total, according to official figures, these farms consume around 300 MWh. But according to independent estimates cited by The Observers, those numbers are grossly underestimated and mega-farms are costing Iran double the energy – equivalent to the electricity of a city of 100,000. residents.

Besides China, Turkey is also enjoying the favors of Iranian officials providing turnkey license and permission to build these giant cryptocurrency production warehouses. At least one Turkish company has been spotted by the Observers editorial staff in Semnan, in the north of the country.

An illegal farm in the basements of the Tehran Stock Exchange

According to an Iranian parliamentary report, of the 324,000 bitcoins “mined” annually in the world, 19,500 are in the Islamic Republic. Figures that do not take into account the existence of many illegal farms, although they are often small so as not to be detected.

More than a thousand outlawed mining sites were dismantled across the country last year, according to Iran’s state-owned electricity distribution company.

Latest discovery and not the least surprising: undeclared cryptocurrency mining machines have been discovered in the basements of the Tehran Stock Exchange, leading to resignation on 1^er October of the president of this financial institution, Ali Sahraï.

With AFP