The electricity-intensive process has recently been blamed for a surge in power consumption which has put the national grid under severe strain amid sizzling summer temperatures.
Saeed Zarandi, the deputy industry, mining and trade minister for planning, said Wednesday several government committees were examining the issue, with a number of ministries and the central bank about to make a final decision.
“With regard to bitcoin, we have to investigate its threats and opportunities and ultimately make an appropriate decision by taking these issues into account,” he told Tasnim news agency.
Bitcoin mining consumes large quantities of energy because it uses costly software to solve complex math puzzles to validate transactions in the cryptocurrency. The first miner to solve the problem is rewarded in bitcoin and the transaction is added to the blockchain or digital ledger.
The puzzle for the Iranian government, however, is to whether define the practice as a productive work.
“If we decide to view this as a productive work, we need to define its framework and come up with a supervisory mechanism, but the important thing is that this activity has not been defined yet a productive work,” Zarandi said.
Across the world, bitcoin mining is frowned at by many governments. In the United States, lawmakers have called for a bill outlawing cryptocurrencies, because they can help governments skirt sanctions.
That is because an awful lot of the US power comes from the dollar being used as the standard unit of international finance and transactions. The use of bitcoin is eating at that advantage and effectively disempowering the United States.
That said Iran is currently grappling with the most restrictive US sanctions ever, which bar the country from accessing the American financial system and using dollars in transactions.
Nevertheless, a virtual gold rush because of cheap energy prices is costing it at the pylons. Zarandi had to brush aside some reports that up to 500 industrial and private units in Alborz province neighboring Tehran were engaged in bitcoin mining.
Iran’s power generation surges despite US restrictionsIran next week will add 1,300 megawatts of new power capacity to its national grid which is under strain from runaway demand driven up by sizzling summer temperatures.
Bitcoin miners are said to be basing their operations in locations with access to subsidized electricity, such as factories, agricultural sites, government offices and mosques.
Last week, Iran’s energy ministry published a report on power consumption, which put the central Semnan province in the red for the highest utilization rate. The small province reportedly dwarfed the vast southern province of Khuzestan which is currently coping with scorching temperatures.
Zarandi hinted at a three-fold hike in power prices for those engaged in bitcoin mining, which could help arrest the rise in excessive electricity use.