TEHRAN (Iran News) The flagship cryptocurrency was trading at around $86,295 per coin, up by more than 7%, as of 19:23 GMT. Bitcoin thus registered its second-best week of the year, according to Glassnode data. The price has more than doubled from about $37,000 a year ago. Aside from Bitcoin, other cryptocurrencies have also seen a surge in price.

The largest token has jumped about 30% since the US election on Nov. 5 and hit an all-time high of $89,599 early on Tuesday, according to Hindustan Times.

At $1.7 trillion, Bitcoin is now the ninth-largest financial asset by market capitalization. Overall, the total market cap of all cryptocurrencies eclipsed $2.88 trillion on Monday.

“With the dust from Trump’s victory still settling down, it was only a matter of time before a run-up of some sort occurred given the perception of Trump being pro-crypto, and that’s what we’re seeing now,” Le Shi, Hong Kong managing director at the market-making firm Auros, told Bloomberg.

During the campaign, Trump made a range of promises to the crypto industry, including that he would make the US the “crypto capital of the planet” and insisting that all Bitcoin should be mined in the country. He even used Bitcoin to buy cheeseburgers and beer for his supporters at a New York City bar.

Trump also pledged to unseat US Securities and Exchange Commission Chairman Gary Gensler, who has taken an aggressive approach to the crypto industry.

Some analysts say the crypto will continue to skyrocket and could even hit the $100,000 milestone by the end of the year.

“Through the year-end, I think it will really depend on Trump’s public commentary and whether he continues to spotlight digital assets as a priority,” Brian Rudick, managing director of research at crypto market maker GSR, earlier told The Market Watch.

“If he continues to reiterate his promises, Bitcoin is likely to continue to act well. If he’s completely silent through the time when he takes the presidency in January, that would not be a good sign, and Bitcoin could give back some of these gains,” Rudick concluded.

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Mostafa Rajabi, spokesman for the electricity industry, has said low precipitation has led to a reduction in generating hydroelectricity.

Add to this bitcoin mining that some hold as the main cause for power outages.

Gholam-Ali Rakhshani Mehr, an Energy Ministry official, has also said droughts have decreased the volume of water behind dams by about 50 percent, consequently leading to a 50 percent decrease in the generation of hydroelectricity.

Iran is now producing about 60,000 megawatts of electricity per day. However, due to the hot summer, the electricity consumption has increased to reach about 66,000 megawatts and that is the chief reason for power cuts.

Rakhshani Mehr has said only 24,000 megawatts of electricity is used for cooling.

The major consumers of subsidized electricity are affluent families and government buildings. Many lights in such buildings are unnecessarily on during daylight while small businesses and families living in small houses or apartments are suffering from power outages.

There are certain ways to compensate for the increase in electricity consumption. The best way is to develop solar and wind farms. This is the most viable way. This is essentially important as the world is turning to renewable sources of energy due to global warming and air pollution.

Focusing on gas-fired power plants may be necessary in short time but it isn’t advisable to release more emissions which their long-term harms far outweigh short-term gains.

The government can act as the best example in using renewables. Now certain state bodies such as the oil and telecommunications ministries, car-producing factories such as Iran Khodro and SAIPA, and companies such as the Mobarakeh Steel Company, have the necessary financial resources to meet their own electricity needs through renewables.

Local auto companies which have raised the prices of their substandard cars almost in parallel with the value of dollar are rich enough to install solar panels to meet their energy consumption. The is somehow true in the case of steel or copper companies.

The other way is to encourage citizens to use electricity efficiently. Even in rich states, that a great portion of their electricity comes from nuclear plants, families are obliged to use electricity efficiently in summer.

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“Ray Dalio on ‘shocking’ tax changes: Could see new ‘prohibitions’ against gold, bitcoin”

“Because I believe that we are in the late stage of this Big Debt Cycle … I believe cash is and will continue to be trash (i.e., have returns that are significantly negative relative to inflation) so it pays to a) borrow cash rather than to hold it as an asset and b) buy higher-returning, non-debt investment assets,” Dalio wrote in a LinkedIn post.

Tax changes will play a massive role in dealing with the debt problem going forward, he elaborated. And more importantly, there might be restrictions in terms of where investors could move their capital.

“Policymakers who are short of money will raise taxes and won’t like these capital movements out of debt assets and into other store holds of wealth assets and other tax domains so they could very well impose prohibitions against capital movements to other assets (e.g., gold, Bitcoin, etc.) and other locations. These tax changes could be more shocking than expected,” the founder of the world’s biggest hedge fund said.

Dalio’s analysis is based on how things have worked in the past and what is happening with debt now.

“I am confident that tax changes will also play an important role in driving capital flows to different investment assets and different locations, and those movements will influence market movements,” he said.

As an example, Dalio reminded investors that during the 1930-45 period, the Fed was able to control yields by “outlawing gold and the movement of capital elsewhere.”

He continued: “While I want to be short bonds (because they have the most terrible fundamentals), I do know that central bankers can keep cash more terrible, and I do know that they might have to prevent the movement to other store holds of wealth assets and other countries … History and logic show that central banks when faced with the supply/demand imbalance situation that would lead interest rates to rise to more than is desirable in light of economic circumstances, will print the money to buy bonds and create ‘yield curve controls’ to put a cap on bond yields and will devalue cash.”

When talking about tax changes, Dalio also alluded to Elizabeth Warren’s proposed wealth tax, saying that its unprecedented size would trigger capital outflows to evade higher taxes.

“The United States could become perceived as a place that is inhospitable to capitalism and capitalists. Though this specific wealth tax bill is unlikely to pass this year, the chances of a sizable wealth tax bill passing over the next few years are significant. Conflicts can increase in such difficult times when accompanied by large wealth, values, and political gaps, and the environment can become inhospitable to capitalists leading them to run from less hospitable places to more hospitable places,” he explained.

This is the new investing paradigm Dalio is talking about, and for him, the solution is “a well-diversified portfolio of non-debt and non-dollar assets along with a short cash position is preferable to a traditional stock/bond mix that is heavily skewed to U.S. dollars.”

He also sees Asian emerging countries’ markets outperforming developed reserve currency countries.

“The economics of investing in bonds (and most financial assets) has become stupid,” he pointed out. “Rather than get paid less than inflation, why not instead buy stuff — any stuff — that will equal inflation or better?”

The COVID-19 pandemic and all the fiscal and monetary policy stimulus that followed created a lot of debt as well as classical signs of bubbles across many assets, Dalio added.

“These circumstances created a lot of government debt—i.e., because there wasn’t enough free-market buying of this debt, central banks had to buy it and had to print a lot of money to buy it with—so much so that they drove rates down to ‘artificially’ low levels, which ‘artificially’ supported financial asset prices,” he wrote. “Now, there’s just so much money injected into the markets and the economy that the markets are like a casino with people playing with funny money … You have stocks that have gone up, and you have classic bubble dynamics in so many different assets.”

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Bitcoin, the largest cryptocurrency, fell over 11% from a day earlier to $35,828.06, at around 12:15 p.m. Singapore time. Ether, the second-largest, was down around 15% to $1,126.72.

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One of the reasons why November was such a difficult month for gold was a clear loss of interest in the precious metal, especially when it came to ETFs, which saw a hefty reverse in inflows.

“Heavy redemptions have replaced the strong inflows, cumulating in the heavy outflow of about 4 million ounces of gold from the ETF tonnage across November. This drying up of gold ETF demand was seen as a key reason for gold price weakness across November,” UOB head of markets strategy, Heng Koon How, and markets strategist, Quek Ser Leang, wrote in a report on Monday.

“Bitcoin is challenging gold: Gold price outlook is ‘no longer overwhelmingly bullish,’ says UOB”

Gold ETFs witnessed an impressive rise in demand this year, which seems to have peaked in October, the strategists said.

“The COVID-19 pandemic … boosted the safe-haven demand for gold … From just a minuscule 4% of total demand in 4Q19, gold ETF demand jumped to as high as 55% of total demand by 2Q20,” they said. “Unfortunately, total gold ETF tonnage appears to have topped out just above 110 million ounces by late October this year.”

A possible explanation behind this drop in ETF demand could be bitcoin’s record-high rally, which intensified last month with the cryptocurrency hitting a new record high of $19,850 on November 30.

“There is an increasing challenge from bitcoin as the ‘new digital gold’,” the strategists pointed out. “From its low of around the USD 10,000 level in early Sep, Bitcoin double in value to just under USD 20,000 by late Nov.”

Wider acceptance and a surge in demand from investment managers have been driving the recent rally in the cryptocurrency.

“As Bitcoin rallied from strength to strength, various commentators have started to declare that Bitcoin is the “new digital gold” and suggested that investors switch their investments from gold to Bitcoin. We do not know for sure the precise amount of this allocation switch into Bitcoin, but this may well be one possible explanation for the contraction in gold’s ETF tonnage in recent weeks,” the strategists explained.

On top of the bitcoin distraction, central banks have put their gold buying on pause in the last few months, which UOB describes as a “disturbing development” that could be impacting the overall sentiment.

“From a net purchase of 120 and 111 tons each across 1Q20 and 2Q20 respectively, global central banks net purchase of gold flipped into an unexpected net sale of 12 tons in 3Q20,” the report said. “This may well be due to the higher gold price over the past few years. Besides, with the broad USD weakness, central banks, particularly from EM and Asia, may well revert to more USD allocation to limit the extent of appreciation of their respective domestic currencies.”

“Bitcoin is challenging gold: Gold price outlook is ‘no longer overwhelmingly bullish,’ says UOB”

Longer-term, however, UOB projects to see a resumption in buying as central banks need to periodically allocate some reserves into gold for diversification.

In light of all of this, UOB has lowered its 2021 price outlook for gold to just $2,000 by the end of next year. Earlier, the bank projected to see $2,200 gold by the second quarter of 2021.

“Our updated gold forecasts are now USD 1,850 / oz for 1Q21, USD 1,900 / oz for 2Q21, USD 1,950 / oz for 3Q21 and USD 2,000 / oz for 4Q21,” the bank said.

However, UOB still describes its outlook as a positive one in the medium term but does admit that it is “no longer overwhelmingly bullish.”

The macro drivers are still supportive of higher gold prices, which include loose monetary policies around the world.

“The U.S. Federal Reserve and other leading global central banks continue their ultra-easy monetary policy, aggressive quantitative easing, and unprecedented expansion of their balance sheets. This is a very important positive medium-term driver for gold and it will not go away anytime soon,” the strategists reminded their clients.

“Bitcoin is challenging gold: Gold price outlook is ‘no longer overwhelmingly bullish,’ says UOB”

From a technical perspective, a steeper drop to $1,670 support seems to be ruled out for now as gold prices managed to rebound back $1,860 an ounce on Monday. But, it is still uncertain whether or not gold can hold here. At the time of writing, February Comex gold futures were trading at $1,866, up 1.41% on the day.

“Odds for a deeper decline towards the long-term support at $1,670 have diminished, but it is too soon to expect a major reversal,” the report noted. “On a shorter-term note, $1,720 can be viewed as a strong support level. Overall, while we maintain our positive medium-term outlook for gold, we need to take note of near term challenges as well as the weaker technical outlook.”

On the way to $2,000, gold will encounter several key resistance levels, including $1,899, $1,930, and $1,965, the strategists added.

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The charter issued by Iran’s Ministry of Industry, Mine and Trade will allow iMiner to operate with a computing power of 96,000 terahash per second at a bitcoin mining farm in the central city of Semnan, the report said.

Hashrate is a measure of the power of computers hooked up to the bitcoin network that dictates their ability to produce new coins.

According to MSN, 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.

The official website of iMiner introduces it as “one of the first and most reputable” companies offering custody and other back-office services in Turkey, Russia, Canada, and the United States.

Interest in bitcoin mining is finding traction in Iran where subsidized power rates are attracting prospectors from countries as far as China, Ukraine, and France.

The government, however, has proceeded with caution due to the opaque nature of cryptocurrencies and the electricity-intensive process strain on Iran’s national power grid.

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.

Last year, Iran’s energy ministry published a report on power consumption, which put the central Semnan province in the red for the highest utilization rate. The small province reportedly dwarfed the vast southern province of Khuzestan which was grappling with scorching temperatures.

Countries with cheap electricity have emerged as major hosts of cryptocurrency mining. China is a major player in the bitcoin market, hosting a substantial share of miners.

In the past, Chinese cryptocurrency miners have officially requested to set up shop in Iran, taking advantage of cheap energy to power and cool their electricity-intensive servers.

Iran faces a Chinese request for bitcoin mining

Chinese cryptocurrency miners have officially requested to set up shop in Iran, taking advantage of the country

Digital miners in Iran are said to be basing their operations in locations with access to subsidized electricity, such as factories, agricultural sites, government offices, and mosques.

While there is no precise tabulation on cryptocurrency mining in Iran, one electrical industry spokesman has put the number of bitcoin mining machines north of 148,000.

On the flip side, the government is facing a serious dilemma as it is taking to the virtual, decentralized currency concept.

Despite being an alternative currency alternative, governments across the world are wary of bitcoin’s disruptive nature due to a lack of state control and regulation.

In the United States, lawmakers have called for a bill outlawing cryptocurrencies, because they can help governments skirt sanctions.

That is because an awful lot of US power comes from the dollar being used as the standard unit of international finance and transactions. The use of bitcoin is eating at that advantage and effectively disempowering the United States.

For countries like Iran, however, virtual and digital currencies provide a back-channel to bypass US sanctions.

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“Energy ministry is to announce the instruction on supplying electricity for mining units besides the set electricity tariffs for the activity,” he added.

“The Central Bank of Iran (CBI) has announced trading cryptocurrencies illegal in the country because it regards digital money as a kind of exports good,” he said.

“The earned revenues from exporting domestically-mined cryptocurrencies must be re-injected back to Iran’s financial system through NIMA- Iran’s Forex Management Integrated System,” he underlined.

On July 29, the Iranian government authorized crypto mining as an industrial activity.

The Iranian government endorsed crypto mining as an industrial activity and noted that those involved should take required licenses from the Ministry of Industry, Mine and Trade.

According to the decision, those who use cryptocurrencies should accept its risks and the government and banking system will not provide any guarantees for them. It also notes that using digital money in domestic transactions is not allowed.

Crypto mining, like other industrial activities, is taxable unless individuals export cryptocurrencies and bring back the revenues to the country, highlights the decision.

This is deemed the first step to legalize cryptocurrencies in Iran. Many experts believe that cryptocurrencies can be used as a means to mitigate the effects of US-imposed harsh economic sanctions against Iran.

Low-price electricity has encouraged many to mine cryptocurrencies in the country; even some reports indicate that miners from other countries such as China are establishing farms in Iran. The government is yet to approve the final price rate for miners.

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According to the decision, those who use cryptocurrencies should accept its risks and the government and banking system will not provide any guarantees for them. It also notes that using digital money in domestic transactions is not allowed.

Crypto mining, like other industrial activities, is taxable unless individuals export cryptocurrencies and bring back the revenues to the country, highlights the decision.

This is deemed the first step to legalize cryptocurrencies in Iran. Many experts believe that cryptocurrencies can be used as a means to mitigate the effects of US-imposed harsh economic sanctions against Iran.

Low-price electricity has encouraged many to mine cryptocurrencies in the country; even some reports indicate that miners from other countries such as China are establishing farms in Iran. The government is yet to approve the final price rate for miners. According to reports, the government is likely to set the exported rate for mining farms which would be around 7 cents per kilowatt-hour; currently the rate is around 2 cents.

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“Most of crypto-currency mining operations in the world used to be carried out in China but today, Iran is turning into a new hub in this area,” the minister said.

He went on to say that electricity prices in Iran are too cheap in comparison with other parts of the world, adding in some European states, the price of each kilowatt of industrial power stands at 20 cents while in Iran the figure is about 9 to 10 cents.

“This is mainly due to the gas reserves that Iran enjoys. These reserves are used freely by Iranian power plants,” he said. “This has turned Iran into an interesting country for crypto-currency miners in the world.”

He said mining machines have already been smuggled into the country and there are many active sites in this area. “I’ve heard of Chinese miners’ presence in Iran through unconfirmed reports,” he said.

“Estimates by Iran’s Energy Ministry show that 700 megawatts of the country’s power are used for mining. This violates ordinary people’s rights,” he said.

On Saturday, an Iranian lawmaker called on the government to prepare and submit a bill on cryptocurrencies while reports indicate a surge in the country’s power consumption due to bitcoin mining.

“Unfortunately, there is no specific law to monitor activities around cryptocurrencies in the country and it is essential that the government prepares a specific bill for determining the fate of cryptocurrencies’ mining, such as bitcoin, and exchanging currencies using this digital money and submit the bill to the Parliament so that the power rate of those who are mining across the country would be determined,” MP Ali Akbar Karimi, a member of Iranian Parliament’s Economic Committee, told Mehr News Agency.

“Mining cryptocurrencies has become a common and widespread activity in Iran and it consumes considerable power which has caused problems for the country, especially in the hot season.”

A mechanism should be defined to control power consumption and also to punish those who mine using subsidized power rates, he added.

The Central Bank of Iran has just announced a ban on activities around cryptocurrencies while such measure has not still turned into a law, he highlighted, adding, “using digital currencies is a good solution for ditching sanctions but it needs to be regulated.”

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“Mining cryptocurrencies has become a common and widespread activity in Iran and it consumes considerable power which has caused problems for the country, especially in the hot season.”

A mechanism should be defined to control power consumption and also to punish those who mine using subsidized power rates, he added.

The Central Bank of Iran has just announced a ban on activities around cryptocurrencies while such measure has not still turned into a law, he highlighted, adding, “using digital currencies is a good solution for ditching sanctions but it needs to be regulated.”

The remarks came as reports indicate that bitcoin mining is mushrooming across the country where subsidized power rates are attracting prospectors from countries as far as China, Ukraine and France.

Saeed Zarandi, the deputy industry, mining and trade minister for planning, said Wednesday several government committees were examining the issue, with a number of ministries and the central bank about to make a final decision, PressTV reported.

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.

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