How Iran mines bitcoins to bypass US sanctions
Crypto farms are even placed in mosques.
Due to sanctions and an economic embargo against Iran, oil exports in the country fell by 70%, leading to an economic crisis.
The Iranian government decided to take a tricky path and began to promote national mining, allowing organizations and government agencies to mine cryptocurrency.
Iran has begun using its own oil to generate electricity, which is "converted" into bitcoins. And they are already trading bitcoins on the external market.
Thus, the Iranian state "sells" its oil reserves in the world markets, using the bitcoin mining process to circumvent the sanctions.
Now Iran accounts for 4.5% of the world's bitcoin production. It takes 10 million barrels of oil annually, and brings in almost a billion dollars.
After the Islamic Revolution, Washington imposed sanctions on Iranian financial institutions and an almost complete economic embargo. Oil exports fell 70%, leading to unemployment and periodic outbreaks of civil unrest. To get around the sanctions, according to Elliptic employees, Iran started mining bitcoins.
In 2019, the government created a licensing system and began to encourage national mining: banks were allowed to buy imported goods for bitcoins, foreign cryptocurrency was banned, and locals were able to sell bitcoins to the central bank. Mining became so popular that crypto farms were even done in mosques, since electricity is free there.
Based on data from the Cambridge Alternative Finance Center and statements from the Iranian state-owned electricity company, Elliptic estimates that Iran now accounts for 4.5% of global bitcoin production.
“If 4.5 percent of bitcoin mining is based in Iran, then there is a 4.5 percent chance that any transaction with bitcoin will involve paying a commission to the Iranian miner. the country that imposed the sanctions. "
Tom Robinson Chief Scientist at Elliptic
Iranian miners consume about 600 MW per year - about 10 million barrels of oil are needed to generate that much electricity. Iran uses oil to generate electricity, which is later converted into bitcoin. This is how the republic sells its energy reserves on the global market. Bitcoins are also used to pay for imported goods, thus bypassing sanctions on payments through Iranian financial institutions. Thus, the country earns about a billion dollars a year.
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