Iran’s economic problems have forced the government to seek alternate ways to keep its economy going. It eventually made the jump to crypto and hasn’t looked back since. While the government doesn’t still isn’t recognizing cryptocurrencies as legal tender, it appears to still be using Bitcoin in particular to make transactions.
Happy Times for Crypto Miners in Iran
Earlier this week, the Iranian Students’ News Agency reported that the country’s government has been funneling Bitcoins mined in the country into dedicated accounts. These funds, as the report explained, are being used to bankroll imports and several other activities.
The report cited a mandate from the Central Bank of Iran and the Ministry of Energy. Per the report, both agencies require that legally registered miners in the country sell their tokens to the Central Bank. The latter will find ways to apply the tokens, primarily funding government imports. The move is reminiscent of adoption initiatives by countries like Venezuela, which are subject to sanctions and have also turned to cryptocurrencies as an evasion tactic.
Currently, things are tightening up for Iran. The United States pulled out of the infamous Iran Deal in 2018, immediately introducing sanctions on the country for developing nuclear weapons. The sanctions were crippling, with stipulations including restrictions on the country’s access to dollars in its reserves. The Washington Post reported that as of May 2019, exports from the country plummeted to new lows as other nations shut their doors to it.
Facing a pariah status, Iran moved to blockchain to keep some business lines open. The country legalized cryptocurrency mining in the middle of last year, committing to channel its wealth of oil and natural gas resources to miners who would invest in the country.
The announcement immediately set off a flurry of miners in the country. Noticing, the government doubled down on its strategy and has been chummy with the crypto mining space ever since. The government introduced a licensing requirement for all miners, with Iran’s Banking and Economic System Reference Media (IBENA) reporting back in January that over a thousand entities had registered as miners.
It’s worth noting that the Iranian Ministry of Industry, Mine, and Trade issued licenses for 14 more companies in July, per a Mehr News Agency report. The licensing ensures that miners will continue to enjoy Iran’s relatively cheap electricity. Per the Mehr News Agency, they will pay $0.11 per kilowatt-hour (kWh), although fees rise to $0.46 per kWh in the peak summer season (June to September)
Uncle Sam Won’t be Pleased
Now that miners appear to be funding the government, it raises the question of what the United States could do as a retaliation. Assuming that incumbent President Donald Trump wins his re-election bid next week, the administration would not be happy to find that a government it sanctioned it still finding ways to do business.
The Trump administration already showed a possible disdain for cryptocurrencies and blockchain technology. Whether this hate is founded on ignorance about the industry or something else isn’t the question. The perception that digital assets aid in criminal activity is alive and rampant.
When they find out about crypto’s role in aiding Iran, they sure won’t be happy.