Iran to stiffen penalties for illegal use of subsidized energy in crypto mining

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Iran to stiffen penalties for illegal use of subsidized energy in crypto mining

The Iranian government will increase penalties for the use of subsidized energy in crypto mining. The move marks another step in the tightening of mining regulation in the country that had faced energy shortages in recent years. 

On April 16, the Tehran Times reported, citing the country’s Power Generation, Distribution, and Transmission company, that the government plans to drastically increase the fines rates for the mining operators who use subsidized electricity. The company’s representative Mohammad Khodadadi Bohlouli specified:

“Any use of subsidized electricity, intended for households, industrial, agricultural and commercial subscribers, for mining cryptocurrency is prohibited.”

According to Bohlouli, the fines for the use of subsidized energy in mining will rise by a minimum of three and a maximum of five times. A repeated violation might lead to revocation of a business’ license and even imprisonment of the offender.

Related: Sanctions and trade: Iran aims to develop a central bank digital currency

Cryptocurrency mining operations in Iran are legal and subject to a licensing process since 2019. As of January 2020, the Ministry of Industry, Mining and Trade had issued over 1,000 mining licenses. Due to some major challenges to the nation’s energy grid, such as drought and reduced rainfall, in May 2021 Iran’s President Hasan Rouhani announced a temporary moratorium on crypto mining. This cycle repeated itself when the moratorium had been lifted in September 2021 only to be reinstated in December.

As the Iranian energy ministry’s spokesman Mostafa Rajabi Mashhadi stated in May 2021, announcing fines for the use of subsidized energy, unauthorized mining of cryptocurrencies “creates problems in supplying electricity due to the damage to the local power grid and transformers.”