Iran Offers Bounty to Citizens Who Report Unauthorized Bitcoin Miners in the Midst of Escalating Energy Crisis

In the midst of the worst heatwave in the last 50 years, power outages disrupt air conditioning and production. Bitcoin miners exacerbate the problem

Amidst the worst heatwave in the last 50 years, power outages disrupt air conditioning and production. Bitcoin miners exacerbate the problem – prompting the government to try to track them down by offering a bounty.

The Iranian government is offering a reward of one million tomans to citizens who report unauthorized Bitcoin mining farms. This was recently announced by Mostafa Rajabi Mashhadi, CEO of the state-owned electricity supplier Tavanir. However, the reward is unlikely to provide significant incentives for people to snoop around factories in their neighborhood. It amounts to just about 20 dollars.

The problem seems serious. According to Iran International magazine, Iran is in the midst of an “escalating energy crisis”. While a severe heatwave grips the country, with temperatures rising above 45 degrees Celsius, and the government orders a “heat lockdown,” power outages frequently occur. Citizens attribute this to the “incompetence of the officials of the Islamic Republic,” according to the online magazine.

For years, the government has failed to meet electricity demand through nationalized energy providers, leading to widespread blackouts every summer. This year, however, the situation is even more dire, as “outages have intensified and the gap between supply and demand has widened.” One citizen complained to the dissident magazine, “Our officials babble about going to war with Israel, but they have squandered our resources by giving money to groups like Hamas and Hezbollah, so we as a nation are now footing the bill.” The regime is engaged in a global struggle for nuclear energy but cannot even ensure the electricity supply.

Crypto miners – especially Bitcoin miners – are not the root of the problem, but they exacerbate it, explained Mashhadi. “Opportunistic individuals exploit our public power grids to mine cryptocurrencies without proper authorization.” This illegitimate mining has led to “an abnormal increase in electricity consumption” and “significant disturbances and problems for the nationwide power grid.”

Already, 230,000 illegal crypto miners have been identified, consuming between 800 and 900 megawatts of power, which, according to Mashhadi, “is equivalent to the consumption of the entire Markazi province.” This province, located in the northwest near the capital Tehran, is home to about 1.5 million people.

This incident once again highlights the complicated relationship Iran has with cryptocurrencies. On one hand, the country welcomes miners because they convert the plentiful electricity into foreign currency, i.e., internationally accepted money. Due to extensive sanctions, Iran cannot export energy resources or products without restrictions; mining Bitcoins is a viable method of turning the country’s wealth of oil and gas into cash.

However, the national power grid and production facilities cannot keep up with the demand created by miners taking advantage of cheap electricity prices in Iran. According to Verivox, a kilowatt-hour in Iran costs 0.23 cents – cents, not euros! – making it the cheapest internationally. Such a low price attracts Bitcoin miners in virtually unlimited numbers, who will consume electricity as long as it keeps flowing and remains cheap.

Electricity in Iran is not only cheap due to the abundance of energy resources but also due to high subsidies. No country in the world pays as much in subsidies for electricity prices – allegedly 19 percent of GDP in 2019 – leading to economically unsound consumption patterns and waste. The problems caused by Bitcoin miners illustrate that by 2024, it is practically impossible to permit mining and subsidize electricity without having a strong power grid. Miners have long become a factor in the global energy market.

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