A Brief History of Mining in Iran: We Sit in the Dark Just to Keep the Bitcoin Miners Running

Author: Shahriar Kia

Compiled by: Azuma, Odaily Planet Daily

Editor’s Note: With the ceasefire agreement reached, the geopolitical conflict between Iran and Israel seems to have temporarily calmed down, but the aftermath of this war has not yet dissipated.

On June 21 local time, the United States bombed three Iranian nuclear facilities located in Fordow, Natanz, and Isfahan through the so-called "Midnight Hammer" operation. On the same day, the Bitcoin hash rate moving average also experienced a sharp decline, leading the cryptocurrency community to speculate — "Is Iran secretly using its nuclear facilities for Bitcoin mining?"

Although Galaxy Research Director Alex Thorn clarified from a technical perspective that "the hash rate is inferred from block time and difficulty, and current evidence is insufficient to determine whether computing power has decreased; more time and moving averages are needed for observation," he also indicated that Iran might be mining and that mining sites could have been attacked.

The story of Iran's mining is not new. In May of this year, the Iranian opposition organization NCRI published a lengthy article outlining the years of history of Bitcoin mining in Iran. Below is the full text.

Bitcoin mining sites associated with the Iranian government consist of rows of "dedicated computer servers" (ASIC miners), which consume electricity on an industrial scale. In recent years, frequent debilitating power outages have occurred across Iran, plunging homes into darkness and halting factories for hours or even days. Investigations have gradually pointed to a hidden driver exacerbating this crisis: large-scale cryptocurrency mining activities operated or sheltered by Iranian government entities — particularly the Islamic Revolutionary Guard Corps (IRGC).

These secret or semi-official Bitcoin mining sites consume vast amounts of electricity, often operating with heavily subsidized electricity prices or even completely free electricity, effectively transferring national grid energy for private gain.

The Rise of Bitcoin Mining in Iran

Iran's involvement in cryptocurrency mining began in the late 2010s when the country sought innovative ways to break economic isolation. After the U.S. reinstated sanctions in 2018, the government viewed cryptocurrency as a tool to bypass banking restrictions and generate revenue. By 2019, the religious regime officially recognized crypto mining as a legitimate industry and introduced a licensing system for miners to attract investment with cheap electricity, on the condition that all mined Bitcoin must be sold to the Central Bank of Iran.

The prospect of subsidized electricity attracted domestic forces and foreign partners, especially Chinese investors — who established large Bitcoin mining farms in Iran's free trade zones and remote warehouses.

The Iranian energy sector quickly noticed the impact. In mid-2019, authorities attributed a "remarkable" 7% spike in national electricity consumption to the surge of unregistered crypto mines. Sporadic reports indicated that mining machines appeared in unexpected places, from abandoned factories to government offices, and even mosques enjoying free or ultra-low electricity rates. As officials realized that many miners were operating in secret to take advantage of electricity priced far below market rates, thousands of illegal mining machines were confiscated.

By 2020, the government had issued about 1,000 licenses for crypto mining farms, but most mining activities remained underground. Former President Rouhani admitted in 2021 that about 85% of mining activities in Iran were unlicensed — this massive gray economy consumed electricity without regulation or payment.

Behind this boom was Tehran's need to monetize its abundant energy resources under sanctions. Bitcoin mining essentially converts energy into cryptocurrency value. With oil exports restricted, the regime utilized surplus oil and gas to generate electricity for mining, then sold the acquired Bitcoin overseas in exchange for hard currency or imported goods, achieving an "export" of energy. It is estimated that by 2021, 4.5% of global Bitcoin mining occurred in Iran, generating "hundreds of millions" in crypto asset revenue for an economy impacted by sanctions.

The Entry of the Islamic Revolutionary Guard Corps

By 2019-2020, reports indicated that Tehran's most influential power group — the Islamic Revolutionary Guard Corps (IRGC) and entities controlled by Supreme Leader Khamenei — had made significant inroads into the cryptocurrency mining sector. Under Khamenei's directives, the IRGC collaborated with foreign companies to establish large mining farms to earn Bitcoin and compensate for losses in Iran's dollar channels. A typical case is a 175-megawatt Bitcoin mining farm in Rafsanjan, Kerman Province, nominally a joint venture between an IRGC-affiliated enterprise and foreign investors, attracted by Iran's extremely low electricity prices.

These mining farms are typically located in economic zones or military bases controlled by the IRGC, enjoying exclusive electricity supplies and operating with minimal oversight. Investigative reports indicate that IRGC-affiliated organizations — including large religious foundations like Astan Quds Razavi — have formed a de facto "cryptocurrency monopoly group," profiting by plundering national electricity. These state-backed miners effectively consume free electricity (or directly refuse to pay bills), operating brazenly with political connections and armed protection.

Multiple sources confirm that the Iranian regime grants its military and security agencies special privileges in the mining sector. In 2022, the parliament quietly passed a bill allowing the military to establish private power plants and transmission lines. This enabled the IRGC to directly access subsidized electricity (even originally public electricity resources) — infrastructure that should supply cities and industries is now repurposed for secret cryptocurrency mining farms.

Regulatory agencies have been almost powerless to curb these activities. In 2021, the Ministry of Energy attempted to shut down an illegal mining site, but IRGC armed personnel directly obstructed the raid, ensuring mining operations continued uninterrupted. The intelligence department refused to intervene against the IRGC, further demonstrating the Revolutionary Guard's exemption from scrutiny. While authorities publicly crack down on small-scale "illegal" miners, large farms operated by regime insiders or serving its interests often remain unscathed.

It is estimated that over half of the mining equipment in Iran is controlled by entities with official backgrounds. Investigative data shows that as of 2023, approximately 180,000 cryptocurrency mining machines were operating in Iran, with about 100,000 belonging to the state or its affiliated enterprises (such as the IRGC). This means that the Revolutionary Guard and its partners, under the guise of a "legitimate industry," effectively control the majority of Iran's cryptocurrency mining capacity. These actors prioritize mining and its profits over the needs of the populace.

Notably, even as the energy crisis worsened, media outlets affiliated with the Revolutionary Guard continued to divert attention by publicly promoting their actions against illegal mining — a public relations tactic that is quite ironic, as electricity regulation is not within the Revolutionary Guard's responsibilities, and the mining farms they operate are at the core of the problem.

Electricity Consumption of Bitcoin Mining Farms in Iran

The energy consumption scale of Iranian cryptocurrency mining farms (especially state-backed ones) is staggering. Due to the secretive nature of operations, precise data is hard to obtain, but both official and independent assessments confirm that mining farms have become a significant burden on Iran's power system.

Thousands of Megawatts of Load

Data from the Ministry of Energy indicates that cryptocurrency mining could consume up to 2,000 megawatts (2 gigawatts) of electricity during peak usage periods — equivalent to the output of 2-3 nuclear power plants, despite the government's explicit demand for mining farms to shut down during electricity shortages. By the end of 2024, energy officials pointed out that illegal mining alone had caused a 16% year-on-year increase in national electricity demand.

This aligns with earlier reports: unlicensed mining farms consumed about 2 gigawatts of electricity during 2020-21, while Iran's total generating capacity at that time was only 60-70 gigawatts. For reference, 1 gigawatt of electricity can meet the daily needs of a city with hundreds of thousands of residents — thus, the 2 gigawatts consumed by mining has a significant impact.

Official Seizures and Assessments

Iran's state electricity company Tavanir has been continuously conducting inspections to identify illegal mining machines. Authorities claim to have seized over 252,000 illegal mining machines since early 2022, with officials stating that if these devices continued to operate, they would consume about 4 gigawatts of electricity. The vice president of Tavanir stated, "This is equivalent to the total electricity consumption of three or four small provinces in Iran."

Even after large-scale seizures, tens of thousands of unregistered mining machines continue to operate — while many licensed high-energy-consuming mining farms (including state-backed ones) have never been included in the rectification scope. In early 2023, a spokesperson for the Iranian Ministry of Energy admitted that about 0.8 gigawatts (800 megawatts) of electricity demand at that time came from cryptocurrency mining (most of which was illegal). This figure may seem low, but it could become the tipping point for electricity rationing during peak demand periods. Every 100 megawatts of electricity occupied by mining farms means that 30,000 households or factories of similar scale lose their power supply.

Cheap Electricity = Huge Profits

Iran's extremely low subsidized electricity prices (some users pay only $0.01-0.05 per kilowatt-hour) make cryptocurrency mining exceptionally profitable. Analysis shows that the cost of mining a single Bitcoin in Iran can be as low as $1,300, while by the end of 2024, the global market price of Bitcoin reached $30,000-40,000. The profit margin of 20-30 times explains why entities like the Revolutionary Guard are willing to risk illegal mining.

The intensity of energy consumption is shocking: mining a single Bitcoin requires over 300,000 kilowatt-hours of electricity — equivalent to the total daily electricity consumption of 35,000 Iranian households. In other words, for every Bitcoin produced by these farms, tens of thousands of households are cut off from electricity for an entire day. Former Energy Minister Reza Ardakanian warned that according to some statistics, cryptocurrency activities consumed nearly 10% of Iran's total electricity generation.

Global Share and Oil Equivalent

In 2021, Iran's Bitcoin mining accounted for about 4%-8% of the global network. Although crackdowns and adjustments in mining difficulty have reduced its share (officially reported to drop to 0.5%-1% in 2022 and below 0.1% by the end of 2024), Iran remains an important player. Elliptic analysts estimate that in 2020, the annual electricity consumption of Iranian mining machines required about 10 million barrels of oil for power generation, equivalent to 4% of Iran's oil exports at that time. This comparison sharply reveals that Iran is burning oil and gas resources that could be exported or used for civilian purposes, solely to produce Bitcoin.

It should be noted that the electricity crisis in Iran is not solely caused by Bitcoin mining. Decades of underinvestment, excessive consumption driven by subsidies, and mismanagement have left the electricity infrastructure overwhelmed. Experts point out that aging power plants and improper fuel scheduling have exacerbated seasonal shortages. However, there is a consensus that unregulated cryptocurrency mining (especially those protected by power holders) has become a major source of pressure on the power grid — these farms increase overall demand and continue to operate during peak electricity usage, significantly intensifying supply pressure.

Evidence of Power Outage Crisis

Since 2019, Iranians have faced rolling blackouts, with the situation becoming increasingly severe in recent years. The summer heat has driven up air conditioning consumption, while winter heating demands have been compounded by fuel shortages at power plants. Cryptocurrency mining has exacerbated this pressure from both directions and has even been explicitly included in emergency response measures.

2021: Major Blackouts and Mining Ban

In January 2021, sudden power outages in major cities like Tehran sparked public outrage. Officials attributed the main cause to the surge in illegal mining (compounded by drought leading to reduced hydropower generation). Before the June elections that year, the power outages worsened, forcing President Rouhani to issue a four-month nationwide mining ban (from May to September 2021). He pointed out that unlicensed mining farms consumed enormous amounts of electricity and promised a crackdown.

At that time, Iran's peak electricity demand was about 60,000 megawatts, and shutting down mining farms was expected to release several thousand megawatts of electricity. Global data also showed a temporary decrease in Iran's Bitcoin hash rate share during the ban. However, enforcement was inconsistent — especially regarding IRGC-affiliated mining farms — and blackouts continued throughout the summer of 2021. The government acknowledged that mining was one of the factors contributing to the "dark summer," alongside high temperatures and aging infrastructure.

2022-2023: Ongoing Shortages and Local Measures

After the ban was lifted in 2021, both legal and illegal mining activities rebounded. Before the arrival of winter in late 2022, the state electricity company warned that illegal mining would lead to a 10% power outage that season. Although authorities required licensed mining farms to shut down during peak electricity usage and claimed to investigate illegal mining sites, the results were limited.

By mid-2023, Iran still faced a so-called "electricity gap." The Ministry of Energy again blamed unlicensed miners for exacerbating shortages while urgently transporting fuel to power plants and importing electricity from neighboring countries. Power outages continued to occur frequently in both summer and winter, although the scope was slightly smaller than during the 2021 crisis.

Summer 2024: "Super Crisis"

In the summer of 2024, Iran faced its most severe heatwave in 50 years, setting record electricity consumption. In August, government agencies and schools in 27 out of 31 provinces were forced to close entirely or partially to conserve electricity. Even with these extreme measures, many areas still experienced planned power outages. Iranian media referred to this as a "super crisis," reporting that the economic losses from power outages exceeded $25 billion annually.

Industries were severely impacted — steel mills, cement plants, and other major electricity consumers halted production for several days due to power restrictions. Amid public outcry, officials again pointed to illegal mining as a contributing factor (alongside extreme weather). The then-Minister of Energy offered rewards for reporting underground mining sites, admitting that unlicensed miners consuming subsidized electricity "seriously impacted the power grid and infringed on public rights."

Winter 2024-25: Cold Wave Power Outages

The change of seasons did not alleviate the crisis. By the end of 2024, a cold wave led to natural gas shortages (most Iranian power plants primarily use gas), resulting in power outages in major cities. Although officials demanded that all licensed mining farms shut down, it was widely believed that some privileged mining farms continued to operate. Investigations revealed that certain mining sites, including those affiliated with the IRGC, remained operational during peak grid pressure while surrounding communities were plunged into darkness. This selective enforcement exacerbated public anger and suspicion.

The government rarely publicly acknowledges the "contribution" of internal mining to power outages, usually blaming increased residential electricity consumption, drought, or excessive air conditioning use. However, the public and independent observers have pieced together the truth. By 2025, slogans and social media in Iran frequently criticized the "electricity theft mafia." Even some regime-affiliated lawmakers and former officials criticized the tolerance of mining, which they claimed was destroying an already fragile power grid.

The Cost to Livelihoods

A significant amount of electricity is secretly diverted to the cryptocurrency mining industry, causing tangible pain for the daily lives of the Iranian people. Every megawatt of electricity consumed by Bitcoin mining farms means one less megawatt of supply for homes, hospitals, and factories. This diversion of national electricity for private use is harming ordinary citizens from multiple dimensions.

Family Hardships

In communities facing frequent power outages, residents are forced to endure scorching summers without air conditioning and freezing winters without heating. Food in refrigerators spoils, and water supply dependent on electric pumps is interrupted. In July 2021, many residents of Tehran were trapped in elevators or stranded on dark roads due to sudden power outages. By 2024, power outages had become commonplace, with people even mockingly sharing "power outage schedules" on social media to plan their lives. Most outrageously, while the public is asked to conserve electricity, some regime-protected facilities continue to consume power 24/7. As one Iranian put it, "We sit in the dark just to keep the Bitcoin mining machines running."

Medical and Safety Crisis

Ongoing power outages threaten critical public services. While hospitals can rely on backup generators to keep life support systems running, not all clinics have reliable backup power. During the major power outage in the summer of 2024, some small city hospitals had to postpone surgeries and transfer patients due to non-functional air conditioning.

Traffic lights and streetlights going out led to frequent accidents, and the darkness at night increased safety hazards. Ironically, while hospitals were plunged into darkness, IRGC bases and mining farms remained brightly lit — this stark contrast exposes distorted priorities.

Economic Losses

Power outages have caused hundreds of billions of dollars in losses to the Iranian economy. From bakeries to processing plants, small businesses have been forced to close; heavy industries like steel and cement face equipment damage and delivery delays. The energy industry media "Power News" estimates that nationwide losses due to power outages exceed $25 billion annually, ultimately translating into rising prices, unemployment, and reduced services borne by society as a whole. This widening supply-demand gap is largely driven by the secretive energy consumption of cryptocurrency mining.

Data Insights

As mentioned earlier, mining a single Bitcoin requires about 300 megawatt-hours of electricity, equivalent to the daily electricity consumption of 35,000 households. According to another calculation, Iranian officials claim that each mining machine consumes electricity comparable to that of 10 households. The continuous operation of tens of thousands of mining machines means that electricity that could illuminate hundreds of thousands of homes is being consumed by mining machines. During peak summer electricity usage, this distribution of electricity could even lead to entire provincial capitals being plunged into darkness. It is no wonder that Iranian public opinion increasingly refers to the government's secret mining as "stealing the lights of thousands of homes."

Public Outrage and Scapegoats

As electricity bills rise, public anger continues to escalate. More and more people are realizing that this is essentially a phenomenon of corruption where the privileged class is pocketing profits while ordinary people suffer from power outages.

Official media still point fingers at the public for "excessive electricity use" or technical failures, deliberately downplaying the impact of internal mining. However, this narrative is becoming increasingly ineffective. People widely suspect that the "illegal mining sites" being investigated are merely small fry, while the real electricity black holes are the large mining farms protected by the IRGC. In fact, each raid often targets small mining machines in remote cottages or residences, while warehouses in military restricted areas remain unscathed. This selective enforcement exacerbates public ridicule and erodes trust in the government's sincerity in addressing the electricity crisis.

A Costly Gamble

What began as an "innovative measure" to cope with sanctions has now evolved into a self-inflicted energy crisis. The "state-backed Bitcoin mining experiment" driven by power centers like the IRGC has exchanged hard currency for the collapse of the power grid. For the ruling elite, while the IRGC's cryptocurrency business is highly profitable, it is essentially parasitic on the country's economy and infrastructure — every Bitcoin produced under its protection means more reckless fossil fuel consumption, more severe pollution emissions, and longer periods of darkness for businesses and households.

In an effort to bypass sanctions, Tehran has inadvertently nurtured an "energy black market" dominated by privileged institutions. The consequences are dire: institutionalized corruption, increased capital flight, and a continuous weakening of the state's control over the energy system.

For millions of Iranians, hope lies in establishing a more transparent and modern energy policy — ending the privileges of the "cryptocurrency monopoly group" and restoring electricity to its public good status. Unless the shadow networks behind the IRGC are severed or genuine regulation is imposed, the crisis will remain unresolved. The power grid will continue to operate beyond its capacity, while the public will still bear the cost in flickering bulbs and sweltering summer nights.

The current situation in Iran serves as a cautionary tale: when mining becomes a tool for the privileged class to amass wealth, it not only destroys energy security but also ignites public resentment, pushing the entire nation to the brink of collapse.