Temporary ban on Bitcoin mining in Iran lifted

GB

The temporary ban on Bitcoin mining in Iran has been lifted since September 22. The ban was introduced because the country was struggling with power outages. Iran legalized bitcoin mining in 2019 and earlier this year it was estimated that the country accounted for about 4.5% of the hashrate in the Bitcoin network.

Temporary ban

Earlier this year, President Rouhani decided to temporarily ban bitcoin mining due to problems with the power grid. Despite huge oil reserves, the country was experiencing energy shortages in some cities. The electricity network came under pressure due to high temperatures, extreme drought and high demand. According to the government, bitcoin mining played a role in this.

Iran & Bitcoin

Iran would be interested in bitcoin because of US sanctions. President Trump backed out of a 2018 deal on the use of nuclear weapons and instead introduced international trade restrictions that have hurt the Iranian economy. The local currency, the Iranian rial, lost half its value against the US dollar last year alone due to inflation.

Many countries have stopped cooperation with Iran due to trade restrictions, which means that the country is missing out on a lot of income. The country is extremely rich in oil, but it is difficult to sell it. The country needs foreign currency such as the dollar to import goods. Because the dollar reserve is no longer replenished, the government adjusted local bitcoin legislation in 2019 in order to receive more tax revenue.

Last year, the Iranian government went one step further, requiring miners to sell the earned bitcoin to the Central Bank of Iran. He sells the coins for dollars or other foreign currency with which goods are imported. Bitcoins have value all over the world and no one in the network has the power to censor anyone or stop transactions. The restrictions imposed by superpowers such as America do not apply to the apolitical Bitcoin network.

However, 85% of Iran’s mining facilities are unregistered, according to President Rouhani. According to sources, this is because miners are not allowed to use cheap and subsidized power through legal channels, making it not profitable enough.

Above: The hashrate of the last 60 days

hash rate

The hashrate rose sharply in the past two weeks, whether this has to do with the lifting of the ban in Iran or because the price rose sharply is difficult to say. The hashrate represents the computing power in the Bitcoin network. More miners in the network means a higher hashrate. After China introduced a mining ban, the hashrate dropped sharply. In total, about 4.5% of the global Bitcoin hashrate would come from Iran.

Every 2016 blocks, the Bitcoin protocol adjusts the difficulty of the cryptographic sums. This is done by the average block time, if it is above ten minutes the sums become easier, if the block time is lower they become more difficult. The block time is again determined by the hashrate, the higher the computing power the faster the sums are solved.

The ‘difficulty adjustment’ ensures that not all bitcoin is released in a short period of time.

Iran is not the only country that is beginning to embrace Bitcoin mining, in Laos they want to mine bitcoin as a pilot using power surpluses from local hydroelectric power plants.

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