In addition to paying the mentioned fines, those miners must also compensate for the damages they cause to the electricity network, Mostafa Rajabi Mashhadi added.

This year, electricity supply is facing two issues: reduction in the power generation of hydropower plants due to reduced rainfall and mining cryptocurrency using household electricity.

Unauthorized mining of cryptocurrencies creates problems in supplying electricity due to the damage to the local power grid and transformers, Mashhadi Rajabi noted, adding continued activity of these miners will definitely make the power supply more difficult and there is a possibility of blackouts due to the damage they cause.

Following the Iranian government’s approval of cryptocurrency mining as an industrial activity in 2019, numerous companies started mining cryptocurrency across the country thanks to the extremely low-cost electricity, and now Iranian power plants started to see this industry as an opportunity to increase their revenues.

In January 2020, the Ministry of Industry, Mining and Trade issued 1,000 plus licenses for cryptocurrency mining units.

With cryptocurrency mining taking a toll on Iran’s electricity industry, energy authorities voiced concerns about the enormous pressures exerted by such activities on the electrical grid, so some power plant companies proposed to offer their excess electricity exclusively to the cryptocurrency miners.

In order to reduce the pressure on the national grid, the government agreed to the proposal but said the power plants will not be able to benefit from the government subsidies on their fuel supplies.

In last July, Rajabi Mashhadi announced that Power plants were also allowed to mine cryptocurrencies.

He said that entities have to apply for the necessary licenses from the Industry Ministry and comply with the tariffs set for crypto mining.

Following the mentioned announcement, the head of Iran’s Thermal Power Plant Holding Company (TPPH) announced that his company is going to hold a tender for offering the electricity output of three power plants for cryptocurrency mining.

“The Necessary equipment has been installed in three power plants of Ramin, Neka, and Shahid Montazeri, and the auction documents will be uploaded on the SetadIran.ir website in the near future,” Mohsen Tarztalab said at the time.

Tarztalab noted that creating stable sources of income has become one of the main goals of Iran’s electricity industry in recent years, explaining: “Unfortunately, constant price hikes and the obligation for supplying electricity with stable prices to subscribers have caused a large gap between revenues and expenditures in the country’s electricity industry, and we need new sources of income to fill this gap.”

He pointed to the sale of electricity to cryptocurrency miners as one of the ways to earn money in the electricity sector and said: “According to the laws and regulations announced by the cabinet and the Energy Ministry, we have been allowed to allocate some capacity of our power plants for mining cryptocurrencies.”

According to Tarztalab, the TPPH is only going to use the power plants’ expansion turbines for the mentioned purpose because they do not consume liquid fuels like gas oil, and only natural gas, which is cleaner, is used as fuel in these turbines.

These turbines are not connected to the national grid and the electricity generated by them is only used by the power plant itself,” he added.

The post Cryptocurrency mining using household electricity to face heavy fines appeared first on Iran News Daily.

Still, Iran’s stringent regulations on digital mining have forced many operators to move to more crypto-friendly countries, Amir-Hossein Saeedi Naeeni, a member of the Information and Communications Technology (ICT) Guild Organization’s blockchain commission, said.

Digital mining, due to its rapid global expansion, generated quite a lot of interest among Iran’s IT operators who bought and deployed bitcoin extraction gear in the past two years.

But the enthusiasm was sapped by the government’s introduction of regulatory measures, Saeedi claimed.

“The laws announced by government institutions for crypto mining are very strict in comparison to other industries in the country, causing many miners to stop operating or migrate to the regional countries for investment,” he said.

Saeedi said license tariffs and electricity costs are such that make crypto mining less profitable in Iran, adding they have to be revised and made more transparent along with the regulatory measures.

He touched on the “special” situation of the country which is under the most restrictive American sanctions ever.

“The digital mining industry, besides bringing currency into the country, can facilitate trade where traders can use cryptocurrencies to import goods and bypass payment problems resulting from the banking sanctions,” he added.

Last August, the Iranian government enacted legislation that officially recognized cryptocurrency mining as an industry. The law requires miners to pay an export premium on electricity and prohibits them from mining during peak electricity-usage hours.

Other than that, cryptocurrency trading remains illegal in Iran, meaning the newly-minted coins need to be exported and yields repatriated, making them subject to taxation.

The decision to regulate digital mining came in response to illegal miners who took advantage of the country’s cheap and subsidized energy to set up farms across Iran.

Last summer, officials blamed a surge in activities related to mining of digital currencies like bitcoin for up to seven percent increase in the country’s monthly electricity consumption.

Ministry of energy officials said at the time that the country’s power grid had become unstable as a result of increased mining of cryptocurrencies.

Nevertheless, media reports said last year that Iranian government officials were considering developing a domestic digital currency to counter US sanctions.

Alireza Daliri of the Directorate for Scientific and Technological Affairs of the Presidential Office said a number of domestic knowledge-based companies were working over the project in cooperation with the Central Bank of Iran (CBI).

The head of the company contracted by the CBI to design and develop a national digital currency said then a blockchain and cryptocurrency research lab had been set up in Iran.

Blockchain is a digital ledger or database where transactions in Bitcoin and other cryptocurrencies are recorded.

According to Iranian media reports, a state-backed national cryptocurrency backed by the local fiat unit, the rial, has already been developed but it has yet to be approved for use by the central bank.

Iran’s currency was targeted by the first round of US sanctions imposed in May 2018 after President Donald Trump withdrew from a landmark 2015 nuclear deal.

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.

The US government has reportedly warned digital marketplaces that buy and sell bitcoin and companies that sell computers used to process bitcoin transactions to avoid providing services to Iranians.

The post Iran allowed crypto mining: Report appeared first on Iran News Daily.

According to this bill, the government and the banking system would not recognize cryptocurrencies as legal coins and the Central Bank of Iran would not guarantee their value.

However, the bill said mining digital currencies would be allowed inside Iran under certain conditions, including if miners obtain the approval of Iran’s industry ministry, do not mine the currencies inside a 30-kilometer boundary of all provincial centers except for the capital Tehran and the central city of Isfahan where tougher restrictions apply.

It said the miners should also observe rules set by Iran’s standardization and communications authorities for mining machines, adding that certain fees will be applied for the energy used for mining the currencies.

As for the energy prices, the bill said authorized mining farms should be charged for the electricity, or the natural gas used to generate electricity, based on prices applied for the electricity exports.

It said mining farms would be taxed like industrial manufacturing units unless the owners return the money earned from the export of their digital currencies back to Iran’s economic cycle.

The bill said Iran’s ministry of industry shall be free to devolve its powers to authorities in special economic zones if foreigners want to set up mining farms in those areas.

The new rules come more than a month after reports suggested that mining farms were mushrooming across Iran in places where subsidized electricity was on offer.

Authorities had hinted in the midst of a crackdown on those farms that they would recognize cryptocurrency mining as it could ease government’s access to sources of foreign currency at a time of U.S. sanctions.

The post Govt. introduces new rules to regulate cryptocurrency market appeared first on Iran News Daily.

Using cryptocurrencies in domestic exchanges is also not permitted.

Also, mining cryptocurrencies, like any other industrial activities, will be subject to tax rules and miners can only be exempted from tax if they return part of their earned currencies into the country’s economic cycle.

Earlier this month, the government’s economic committee approved a mechanism for mining cryptocurrencies.

“The government’s economic committee has approved a mechanism for mining digital coins and it will later be put to discussion at a cabinet meeting,” the Governor of Central Bank of Iran (CBI) Abdolnaser Hemmati announced on July 21.

As reported, the committee also passed a proposal for applying export rates for the electricity used by the domestic miners.

According to Deputy Minister of Energy Homayun Haeri, “a plan to apply the exported electricity rate for mining farms was approved by the government’s economic committee and will soon be discussed and voted on by the cabinet.”

Iran has been recently wrestling with over consumption of electricity by cryptocurrency mining farms across the country as many have rushed to mine coins due to cheap electricity.

Mining cryptocurrencies is, in nature, a very energy-consuming process. Some scholars even believe that due to its exponential growth it might consume the world’s entire electrical energy by 2020.
In late June, Iranian Energy Ministry announced that due to bitcoin mining processes the country’s electricity consumption increased by seven-percent this summer.

Consequently, the ministry proposed that the costs of electricity for cryptocurrency miners should be determined based on electricity export rates.

Following the Energy Ministry, Iran’s Power Generation and Distribution Company (known as TAVANIR) also announced that using electricity for mining cryptocurrencies is illegal and those household or commercial subscribers that use electricity for such activities will be cut off from the national grid.

The post Govt. gives green light for cryptocurrency mining appeared first on Iran News Daily.