According to local news outlet Arz Digital, the day before, Rajabi Mashhadi, a spokesman for Iran’s Energy Ministry, said the entity would cut power supplies to all licensed crypto mining companies in the country by the beginning of July.
Referring to an expected electricity shortage from the peak of the summer season, Mashhad said, “There are currently 118 authorized [digital currency] extraction centers in the country, which should cut off electricity supply to the national grid as of the beginning of July.”
“Last week, the country’s electricity consumption recorded an all-time high of 62,500 MW during peak consumption, which is an important figure. According to forecasts, this week’s consumption requirements will exceed 63,000 MW, which means that we must limit the electricity supply.”
The move comes after the country’s Energy Ministry reported a disappointing gain of 1.2 gigawatts in its power generation capacity in 2021. This was well below the expected gain of 3.5 gigawatts, which led to a shortfall in energy use.
Because of international sanctions, Iran lacks the necessary investment in power generation capacity and natural gas production to keep up with consumption. On the other hand, demand is rising dramatically due in part to the low electricity prices in the country. The average cost of household electricity in Iran costs less than $0.005 per kilowatt-hour, a fraction of $0.024 per kilowatt-hour in neighboring Iraq and $0.159 per kilowatt-hour in the United States. For political reasons, the Iranian government spends more than $60 billion annually in indirect subsidies to reduce electricity prices.
According to Cambridge University, Iran accounts for 0.12% of the Bitcoin (BTC) network hash rate and was previously among the top 10 countries in the world by BTC mining productivity. However, its share in the bitcoin mining market has fallen from a peak of 4% in previous years, in part due to the severe shortage of power in the summer of 2021.