Iran slaps illegal Cryptocurrency Miners with Huge Fines and Imprisonment

Succeeding cryptocurrencies, including Bitcoin, have been in controversy since their inception. Many countries are in the process of setting up rules and regulations regarding digital currencies. Lately, Iran’s government authorized the regulated cryptocurrency mining process, though authorities started cracking down on illegal mining in 2021 to reduce the damage to the energy supply in the country.

The Iranian government reportedly aims to establish new rules and regulations to make the penalty for unauthorized bitcoin mining better. The whip on unofficial crypto miners seems to be the first step toward this aim. The Iran Power Generation reveals that the new legislation of the Islamic Republic of Iran will involve canceled business licenses and the detention of violators.

The Tehran Times cited IRNA, the news agency, and the statement of Mohammad Khodadadi Bohlouli, who said the increased number of penalties comprise enhanced fines by three to five times and jailing of the offender. Illegal crypto miners can also cause their business license to get canceled if they are involved in repeated violations.

The Iranian official unveiled that the mistreating finance electricity for crypto mining can degrade the quality of electricity supplied by the national grid and destroy users’ electrical appliances, such as air conditioners, refrigerators, and television. According to Mohammad Khodadadi Bohlouli, using subsidized electricity intended for residential, commercial, industrial, and agricultural subscribers to mine digital currency is against the law.

Iranian authorities believe illegal cryptocurrency mining is causing power shortages across the country. The government outlawed digital currency mining in May 2021 for four months to minimize the frequency of power shortages in the country. Iranian officials say they cannot ignore the soaring electrical demand during the hot summer days in the country.

According to the IRNA, Commander Gen. Hossein Rahimi, Tehran Police, apprehended 7,000 computer miners in a deserted facility located in the western part of Tehran.  Crypto users and traders know how mining works to generate bitcoin and other cryptocurrencies. The process requires a collection of computers to solve complicated mathematical algorithms. Crypto mining is tremendously energy-intensive and frequently requires electricity generated from fossil fuels. It is worth mentioning that Iran is rich in fossil fuels.

Iran authorized bitcoin mining in 2019 for industrial purposes only, leading to a mining boom across the nation. Many companies started cryptocurrency mining, followed by the Iranian government’s approval in the same year. It was not a problem at that time, thanks to low-cost electricity. Today, the power plants have seen this industry, benefiting from this approval to increase revenue.

The government released more than 1,000 digital currency mining tools.

Elliptic, the blockchain analytics firm, discloses that Iran explains 4.5% of bitcoin mining that produced hundreds of millions of dollars in digital currency revenue. They believe the wealth can be handy to mitigate the daunting impact of US sanctions.

Mohammad Khodadadi Bohlouli says the new regulations will enhance the punishments for unauthorized cryptocurrency mining. These punishments are increased fines by three to five times, sending the offender behind the bar, and calling off the business licenses.

The official said misuse of subsidized power to mine digital currency results in the reduced quality of power supply in the national grid. It also harms residential users’ electrical appliances, such as AC, TV, and refrigerators.

Besides approved units, several illegal miners have started using the national grid’s electricity to mine cryptocurrency, which led to significant problems for the Iranian power industry. Iran is already experiencing problems due to drought and reduced rainfall.

Unauthorized crypto mining creates several problems in electricity supply because of the damage to the national power grid and transformers. Aside from paying the fines, unauthorized miners will have to compensate for whatever they have damaged to the electricity network.