1,000 illegal bitcoin mining farms closed in Iran

Iran’s power generation company Tavanir is shutting down illegal farms dedicated to mining bitcoin. Local media in the Persian country reported that some 1,100 facilities of this type have been dismantled for not being duly authorized.

To detect unlicensed miners, the company offers “rewards” of 100 million riyals, about $ 480, to those who provide information on the location of the facilities. The strategy came into effect in July as an alternative as Tavanir “cannot detect all illegal farms just by studying their consumption patterns.”

The dollar amount of incentives is cited by a report from the Financial Tribune, but the figure may vary according to the exchange rate used as a reference.

The company’s deputy director, Mostafa Rajabi Mashhadi, said that miners are installing the equipment in industrial or agricultural structures that, by nature, already have high consumption. When operating in this type of facilities it is not possible to detect farms.

There are currently 624 active farms in the country for mining bitcoin and cryptocurrencies, a legal activity that is recognized by the government. It is unclear if equipment from illegal farms is seized, if fines are imposed or if people are detained.

The bitcoin mining in Iran it was endorsed by the State in September 2018, a decision that was well received by local and foreign miners who have operations in the country. However, an undetermined percentage would have gone underground due to electricity rates.

Iranian miners must apply for an authorization to operate from the Ministry of Industry, Mines and Commerce. The local electricity consumption rate for miners is $ 0.07 / kWh. However, during summer season the price rises up to 4 times, which could impact the incentives miners receive.

As an alternative, the government proposed a 47% reduction in the rate for licensed miners during that period. In addition, the farms had to participate in a program to replace high-consumption air conditioners with energy-saving equipment.

CriptoNoticias reported in July that Tavanir had authorized bitcoin mining even in power generation plants. To function in this way, the plants also had to apply for a license from the aforementioned ministry of industry.

Low electricity prices in Iran are incentivizing bitcoin mining in the country. Beyond the economic benefit that miners obtain with their operations, the country would be promoting the cryptocurrency industry as a political and economic measure in the face of United States sanctions.