The push by many in Iran to establish the country as a mecca for crypto miners may be having some unintended environmental consequences.
According to a Bloomberg report, the energy requirements of Bitcoin (BTC) and crypto mining in Iran coupled with the demand for heat in an exceptionally cold winter have contributed to a natural gas shortage, forcing power plants to allegedly burn “low-grade fuel oils” to meet the country’s electrical needs. The result has been “thick layers of toxic smog” across many Iranian cities and blackouts as some power plants have closed.
Iran is already facing economic burdens as U.S. sanctions have isolated the country from foreign financial institutions, a dire situation with the global pandemic — roughly 1.3 million total cases of COVID-19 — and now a winter with average temperatures just above freezing at night in Tehran.
Bijan Namdar Zanganeh, Iran’s Oil Minister, reportedly denied that any power plants in the country were resorting to using inferior fuels. However, major news outlets have commented on the seemingly worsening situation with air pollution in Tehran — according to IQAir, the city’s air quality registers as “unhealthy” with an air quality index of 171 at the time of publication.
Last January, Iran’s Ministry of Industries, Mining and Trade announced it had issued 1,000 licenses for crypto miners following the government’s decision to authorize it as an approved industrial activity in July 2019. Authorities later allowed industrial-scale power plants in the country to operate as Bitcoin miners “if they comply with approved tariffs,” have the necessary licenses, and don’t use subsidized fuel.
Some Iranian officials have continued to work towards making the country a regulatory safe haven for crypto miners. In May, President Hassan Rouhani tasked officials with drafting plans for a national crypto mining strategy. The number of mining operations in the country expanded significantly in 2020, with authorities granting Turkish firm iMiner permission to establish a 6,000-rig facility in Iran’s Semnan province.