Iran has introduced a new measure to curb illegal cryptocurrency mining amid a severe heat wave and power shortages. The Iranian government will offer a reward of about $24 (1 million rials) to encourage people to report unauthorized cryptocurrency mining. The move is part of the Iranian government's efforts to relieve pressure on the national power grid, with officials claiming that illegal mining activities have exacerbated power supply problems.
The heat wave sweeping across Iran has caused temperatures to soar to 45 degrees Celsius, further exacerbating the already fragile power grid. Mostafa Rajabi Mashhadi, CEO of Iran's state-owned power company Tavanir, said that illegal crypto mining is one of the main causes of the current energy crisis. He pointed out that some speculators are using government-subsidized electricity and public networks to illegally mine cryptocurrencies.
Mashhadi added that the unauthorized use of electricity had led to an "abnormal surge" in power consumption, which in turn triggered power outages across the country. He revealed that authorities had discovered about 230,000 illegal mining machines, which together consumed about 900 megawatts of electricity, equivalent to the energy needs of a province with a population of 1.4 million.
To address this problem, the government has introduced a reporting bounty system. Citizens who report illegal crypto mining machines will receive a reward of 1 million riyals, or about $24. This measure is intended to encourage more people to help identify and shut down these illegal mining activities that put additional pressure on the country's power infrastructure.
Iran has a long history of illegal crypto mining, with reports of mines being set up in unlikely locations such as schools and mosques, which enjoy free or highly subsidized electricity, making them ideal locations for miners to operate without incurring high energy costs.
Cryptocurrency mining is a resource-intensive process where specialized computers solve complex cryptographic puzzles to verify transactions and receive rewards, most commonly Bitcoin. As the most popular proof-of-work (PoW) blockchain, Bitcoin mining requires a lot of computing power, making it an energy-intensive activity.
The Bitcoin halving event in April this year reduced mining rewards by 50%, making it more difficult for miners to maintain profitability. Some major U.S. crypto miners have therefore turned to artificial intelligence (AI) to maintain operations. Iran faces unique challenges. The country's subsidized electricity has made it a hotspot for illegal mining, further exacerbating the pressure on the already overloaded power grid.
Iran is not the only country to take drastic measures against cryptocurrency mining. In May, Venezuela banned crypto mining due to concerns about the impact of its energy consumption on the national grid. These measures highlight the growing contradiction between the energy needs of crypto mining and the need for a stable electricity supply under economic or environmental pressure.
Iran’s whistleblower reward system is the latest attempt to control the negative impact of illegal crypto mining. As global demand for cryptocurrencies and energy continues to increase, other countries may adopt similar measures to find a balance between technological development and resource management.
