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Iranian government to cut power to legal crypto mining rigs in the country

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For many years, the government has aggressively subsidized electricity production, resulting in exceptionally low pricing. It contends that this is no longer viable.

According to local news site Arz Digital, a representative for Iran’s Ministry of Energy warned the day before that the agency would disconnect power supplies to all of the country’s licensed crypto mining enterprises by the beginning of July.

Mashhadi remarked, “There are presently 118 authorized [digital currency] extraction centers in the country, which must turn off their electrical supply from the national grid from the beginning of July,” citing an anticipated electricity deficit from the peak-summer season.

“Last week, the country’s electricity consumption recorded an all-time high of 62,500 megawatts (MW) during peak consumption, which is a significant figure. According to forecasts, this week’s consumption requirement will exceed 63,000 MW, which means we must limit electricity supply.”

The move comes after the country’s Ministry of Energy announced a disappointing increase in electricity generation capacity of 1.2 gigatonnes (GW) in 2021. This was far less than the predicted gain of 3.5 GW, resulting in a power use deficit.

Due to international sanctions, Iran lacks the necessary investment in power generation capacity and natural gas output to meet demand. On the other hand, demand is surging, thanks in part to the country’s extremely low electricity prices. In Iran, average residential power costs as little as $0.005 per kilowatt-hour (kWh), compared to $0.024 per kWh in neighboring Iraq and $0.159 per kWh in the United States. The Iranian government spends more than $60 billion per year in indirect subsidies to depreciate electricity prices for political purposes.

According to Cambridge University, Iran accounted for 0.12 percent of the Bitcoin (BTC) network’s hash rate and was previously ranked among the top ten countries in the world in terms of Bitcoin mining productivity. However, their share of the Bitcoin mining market has declined from a high of 4% in recent years, owing in part to a severe power crisis in the summer of 2021.

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