More than 7.000 mining machines have been confiscated by Iranian authorities from an illegal mining farm operating in the country's capital, Tehran.
Iran's crackdown on cryptocurrency miners
According to a report by Iranian state media, the Islamic Republic News Agency (IRNA), the raid is part of efforts to stop illegal cryptocurrency mining in the country.
Tehran Police Chief Hossein Rahimi said authorities also found 3.000 cryptocurrency miners across Tehran in the past 48 hours after police raided 50 locations.
However, he said the seizure of the 7.000 mining machines is the largest seizure of its kind to date. He added that cryptocurrency mining has significantly reduced the country's energy use so far.
The news comes in the wake of the Iranian government's recent suspension of cryptocurrency mining. The ban will last until September 2021.
The government has banned cryptocurrency mining for nearly four months due to frequent blackouts. The ban is part of efforts to reduce energy shortages that officials attributed to the overwhelmingly high demand for electricity during the summer.
Creating Bitcoin takes a lot of energy
Bitcoin (quotation BTC) is created through a process known as mining, in which computers compete to solve complex mathematical problems. The process is energy-intensive, often based on electricity generated from fossil fuels, which are abundant in Iran.
Before the crackdown on miners, cryptocurrency mining was officially recognized as a legal industry.
The country's miners must obtain a license from the Ministry of Industries and pay their electricity bills based on export rates. However, many miners have operated in Iran without obtaining a license.
Last month, the Iranian Ministry of Energy revealed that cryptocurrency miners used domestic electricity to mine Bitcoin to bypass paying higher tariffs.
The ministry said such illegal miners who are caught will pay heavy fines. Police recently captured four miners illegally using household electricity in a Pakdasht house in the southeast of the country's capital.
Mining of cryptocurrencies in Iran
Iran has accepted cryptocurrency mining in recent years, offering cheap energy and requiring miners to sell their bitcoins to the central bank. The prospect of low-cost state-subsidized power has attracted miners, particularly from China, to Iran.
The rise of cryptocurrency mining in Iran has helped the country earn money in cryptocurrencies and address issues such as trade restrictions.
These funds are used for the settlement of payments as the authorities allow cryptocurrencies mined in Iran to be used to pay for imports of authorized goods. The government was using cryptocurrencies to evade sanctions.
According to Elliptic, the electricity used by miners in Iran is the equivalent of around 10 million barrels of crude oil each year. That is 4% of total Iranian oil exports in 2020.