An executive directive issued by Iran’s First Vice-President Eshaq Jahangiri has formally legalized cryptocurrency mining in the country, although the use of digital currencies in the Iranian banks or for domestic trade will be still prohibited.
In a directive issued on Sunday, Jahangiri specified the terms and conditions for cryptocurrency mining in Iran as part of plans to create a safe, low-cost, transparent and high-speed basis for economic transactions and facilitate business activities.
However, neither the Iranian administration nor the local banks would support or guarantee the use of digital currencies.
According to the regulations, miners can freely produce cryptocurrency in Iran at their own risk, albeit after getting permission from Iran’s Ministry of Industry, Mine and Trade.
In addition, the Institute of Standards and Industrial Research of Iran (ISIRI) will be obliged to work with the Ministry of Energy and the Ministry of Information and Communications Technology to lay down quality standards and regulations on the production and import of cryptocurrency mining machines and devices, including the energy consumption rating.
The cryptocurrency miners will be allowed to buy electricity from the national grid or from new power plants independent of the grid, at reasonable prices.
Under the new directive, digital currency mining in the peak of power consumption will be prohibited, be it electricity from the national grid or the natural gas for running a separate power plant.
In recent weeks, Iranian authorities have seized thousands of illegal bitcoin mining machines, mostly from the abandoned factories.
A spokesman for the Energy Ministry has said cryptocurrency mining operations were destabilizing the power grid and affecting electrical access for households and businesses in Iran.
In comments on June 23, the spokesperson for Tavanir, an Iranian state-run company in charge of power supply and distribution, said the country’s consumption in the previous Iranian month had risen by 7 percent compared to the corresponding period last year, mainly because of the Bitcoin miners’ outsize thirst for electricity.
He also warned that the electricity users producing digital currencies, like Biotcoin, will be detected and their power will be cut off.
Every Bitcoin mining machine that is powered by the same cheap source of electricity available to houses consumes the equivalent of 24 dwellings, the spokesman added, saying the administration has not still set a tariff on the power consumption of digital currency miners.
With electricity so reasonably subsidized that many Iranian occupants buy modern air conditioners with powerful compressors, the number of digital currency miners using power in the residential areas has been growing in recent years.
Bitcoin is a cryptocurrency and a form of electronic cash which many computer geeks believe will form the future of the global economy.