The resumption of Bitcoin mining will represent an increase in the hash rate, for which the mining difficulty will be more difficult. The authorities may have decided to suspend the ban on the activity as they solved the energy problems or needed the taxes from miners.
The temporary four-month suspension of Bitcoin mining in Iran recently came to an end. In this way, the licensed miners of that country will be able to resume their activities.
The Iranian authorities decided to implement that measure due to problems with the power supply. Many cities began rationing periods, but the issue had already reached the industrial sectors. For that reason, the government decided to suspend cryptocurrency mining, as it requires consuming large amounts of electricity.
The resumption of the operations of Iranian farms will represent a significant increase in the hash rate. That country is in the top 10 countries with the highest Bitcoin computational power. In other words, the addition of Iranian farms will make mining more difficult for the following adjustment of difficulty.
The Authorities Accuse Bitcoin Mining of Causing the Blackouts in Iran
Bitcoin mining is legal in Iran, but some politicians frown upon such energy-intensive activity. That situation becomes worse when the country is experiencing severe shortages in supply. In May, the government led by former President Hassan Rouhani decided to ban the activity.
Many representatives of the authorities consider that this business is the culprit of the blackouts in Tehran and other large cities. For that reason, the government called on duly registered companies to collaborate by turning off their equipment. The owners of those firms disconnected the farms for four months without suffering persecution or seizure of equipment.
Some illegal miners, a significant percentage in Iran, turned off their equipment during the abovementioned period.
Anyway, the Iranian authorities ended the official ban on Bitcoin mining within their borders. No one yet knows whether they solved the energy problems or need the taxes from miners to finance themselves.
How Tehran Leverages the Bitcoin Mining Process
The bloc by the United States against Iran has prevented that nation from accessing much of the international trade. As there are few buyers, large oil reserves remain partially inactive, which has reduced the volume of foreign exchange entering the country.
That leads to the deterioration of the overall living conditions of the population, as has happened in Venezuela. However, Iran has a higher degree of industrialization, which allows it to suffer less from the shortage of imports.
Bitcoin miners have to hand over their production to the Central Bank in exchange for the local fiat currency equivalent. That allows the authorities to exchange the cryptocurrency for foreign currencies or to trade directly with it.
For that reason, the authorities’ decision not to extend the banning of the mining activity could mean two things. First, the Iranian government has already solved the energy problems. Second, those problems are still there, but the authorities need foreign exchange for their economy.
By Willmen Blanco