How Does Bitcoin Mining Work? Everything You Need to Know

Iran Lifts Ban on Cryptocurrency Mining 

All over the world, cryptocurrency mining is an energy demanding process. However, about seven percent of the world’s cryptocurrency mining is done in Iran. This mining of cryptocurrency uses a lot of electricity and increases the demand for electricity. 

Mining of cryptocurrency in Iran perhaps results from the fact that the country has one of the cheapest electricity rates across the globe. This definitely encourages businesses to mine cryptocurrency and generate more profit because their cost of business is much lower compared to other bitcoin miners around the world.

Since the ban was announced, the government has seized thousands of illegal cryptocurrency mining computers. The Iranian police once seized 7,000 illegal cryptocurrency mining computers at an abandoned factory in Tehran. After four months, the ban has been lifted by the Iranian government.

Iran Experiences Power Shortage

Iran has experienced frequent shortages of electricity starting May. This was due to higher temperature then and hence people were using air conditioners for cooling. This led to an increased demand for electricity and hence the frequent power shortages.  Despite the ban, illegal cryptocurrency mining continued, up to tens of thousands of computers were still running the mining process.

Iran has been experiencing chronic power shortages largely due to poor investment in the sector and hence frequent power shortages happen during periods of high demand of electricity. Frequent shortages are being expected in the winter, as it is another period that has an increased demand for electricity. The power generation in Iran this year was further worsened by the severe drought that happened. Now a lot of the dams responsible for power generation are operating below capacity due to the reduced water available.

There has been debate over the contribution of cryptocurrency mining to the power shortage experienced in the country. Some officials are of the view that cryptocurrency mining could not be blamed for the power shortage, as it uses only about 300 Megawatts of power. Whereas, others argue that the amount of power usage of cryptocurrency mining operations in the country is much higher. Hence, they are in support of banning cryptocurrency mining because they feel it can threaten the power grid.

Government Officials Involved In Illegal Mining 

Local media in Iran have reported that some government offices are running illegal cryptocurrency mining operations. This is despite the ban on cryptocurrency mining in June. Ali Sahraei, the head of the Tehran Stock Exchange, resigned on September 29 after an illegal mining operation was discovered in Tehran Stock Exchange headquarters.

This supports the reports that even the government officials are actively involved in running mining operations in the country, and they did not stop despite the ban. Iran imposed a ban of Bitcoin mining for four months that was supposed to end September 22. Though no official announcement to end the ban until today.