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Iran introduces penalties for illegal mining - Monfex
Iran's new regulations on cryptocurrencies
Iran and cryptocurrencies
Iran is one of the countries that were very reluctant to adapt blockchain technology and introduce state regulations that would positively sanction the presence of cryptocurrencies in the economy, not to mention the introduction of innovative technology-based projects blockchain. Extraction and trade in cryptocurrencies were illegal until recently in Iran.
Until recently, Iran's economy was considered to be one of the fastest-growing economies among Arab countries, and it was certainly worth noting that, aside from oil, Iran as one of the few countries in the region also invested in other sectors of the economy. Cryptocurrencies however, they were considered illegal, and the possibility of money laundering and the lack of state control over flows on coin exchanges caused a reluctant attitude of the state towards blockchain. The Iranian market was opening to foreign investment, but this did not apply to the cryptocurrency market.
The situation has changed as a result of the economic crisis that has been going on in Iran for over a year. In 2018, the Iranian currency exchange rate fell by as much as 75% against the US dollar, inflation and unemployment raging in the country. The authorities tried to stave off the deepening economic crisis by changes in the staffing of the government, but they did not bring a positive result. The sanctions imposed by the United States, which after the freezing period lasting since 2015, were resumed by the administration of President Trump in September 2019 did not help either. Sanctions included banks and oil producers, as well as many other areas of the economy that raised suspicions of links with terrorist organizations. Despite the fact that the Iranian government immediately announced that it would break the sanction and export oil to global markets, this did not help stop the accelerating economic crisis in the country, which in mid-November 2019 led to violent social protests caused by the gigantic increase in fuel prices.
Iran is opening up to cryptocurrencies
The economic crisis and rising unemployment have led to a renewed discussion on the recognition and legal sanctioning of some of the actions and solutions that offer cryptocurrencies. In addition, in June and July 2019, several illegal cryptocurrency mines were discovered that, using cheap Iranian electricity, could have earned large sums of Bitcoin mining. Monfex wrote about the problem of rising electricity prices and mining profitability in an article, "What is cryptocurrency"In the Knowledge Base on Cryptocurrencies, available in the tab on the Monfex website.
Legal regulations concerning digging cryptocurrencies in Iran, introduced in July 2019, concerned special rates for electricity for mines operating within the country. Initially the proposed rate was 0,07 USD per kilowatt hour. While cryptocurrency trading in Iran it was still illegal. Tehran initially focused on mining cryptocurrencies, but power consumption quickly showed the need to introduce broader regulations and redefine the position of the authorities. The electricity consumption of cryptocurrency mines has caused an increase in electricity consumption by as much as 7% on a national scale, which is felt especially during the holidays, when the country's electricity consumption is at its highest. In July 2019, the government closed two illegally operating cryptocurrency mines and confiscated approximately 1000 excavators. The President of the Central Bank of Iran (CBI), Abdol Nasser Hemmati, announced that the price of electricity used by mines should be based on the price of electricity intended for export. Apparently, this caused some mines to connect to the electricity source from the mosques, because there, the price of electricity was definitely lower.
What's more, the Chinese also became interested in the Iranian market with the possibility of using cheap electricity as a potential place to transfer and locate some cryptocurrency mines, after the ban was lifted in 2018. Mohammad Javad Azari Jahromi, Minister of Communications and Information Technology in the Iranian government, emphasized that the government in China is not planning a national project to invest in the cryptocurrency mining market in Iran, but has left the door open to private companies and individuals.
In the face of rampant hyperinflation causing a huge collapse in the Iranian market, Bitcoin and cryptocurrency trading is, paradoxically, a safer and more stable option for Iranians to hold capital. There was even a concept of creating your own cryptocurrency, as did other countries in the face of the economic crisis, such as Venezuela and the Petro project, which, however, turned out to be a failure. When it comes to using foreign servers, Iran is also on Simplex's list of restricted countries, which you can check on the Monfex website. This means Iran cannot use the Simplex payments Monfex offers to buy cryptocurrencies on the site in order to start investing.
Digging cryptocurrencies is illegal again?
In November, planned increases in fuel prices that will increase the cost of living in Iran, while rampant unemployment and hyperinflation, caused violent protests on the streets of Tehran and in many other cities in Iran. It also affected the government's cryptocurrency policy. The Iranian government has awarded a prize for any information on the illegal extraction of cryptocurrencies. The prize is considerable, as it amounts to as much as 20% of the amount of compensation that an illegal business will have to pay. In addition, according to Cointelegraph, 1 August arrested one person accused of smuggling cryptocurrency mining devices into the country.
The price of electricity in the country is highly subsidized, so it pays for miners to look for cheap places where they can connect to the electricity source illegally. The new regulations also prohibit the operation of cryptocurrency mining devices during peak electricity consumption hours. The kilowatt-hour price for the cryptocurrency mine was set at 9650 rial - which is now around $ 0,29 and is the same price as the price for exporting electricity. In addition, the price is to vary depending on the season, due to different electricity consumption in the warm and colder months. In winter, it is to be half as much, and in summer months, 4 times higher.
In addition, the government plans to introduce a cryptocurrency mining registry each year. Not all cryptocurrency market laws were negative. In September it was announced that cryptocurrency mining companies in Iran could benefit from tax breaks provided they agree to transfer their income to the country.
However, the latest reports from the rioting country are not favorable for the cryptocurrency market because the government has decided to block the internet in order to limit information flow between protesters.
