According to Arz Digital, a local news outlet, Rajabi Mashhadi, who is the spokesperson for Iran’s Ministry of Energy, said that the Ministry would be cutting off the power supply to the country’s licensed crypto mining firms, starting in July.
Mashhadi goes on to clarify the reason, saying that the country is facing an electricity deficit that will peak during the summer season, stating, “There are currently 118 authorized (digital asset) extraction centers in the country, which must cut off their electricity supply from the national grid from the beginning of July.”
The country’s Ministry of Energy reported earlier that year that country only gained 1.2 gigawatts (GW) to its power generation capacity during 2021, which was short of what was projected, 3.5 GW. This led to a power deficit.
“Last week, the country’s electricity consumption recorded an all-time high of 62,500 megawatts (MW) during peak consumption, which is a significant figure. According to forecasts, this week’s consumption requirement will exceed 63,000 MW, which means we must limit electricity supply.”
Due to international sanctions, Iran lacks the investment needed in power generation capacity and natural gas production to keep up with consumption. On the other side, demand is soaring partly because due to the country’s extremely low electricity prices. Average household electricity in Iran costs as little as $0.005 per kilowatt-hour (kWh), a fraction of the $0.024 per kWh in its neighbor Iraq and $0.159 per kWh in the United States. For political reasons, the Iranian government spends over $60 billion annually in indirect subsidies to depreciate electricity prices.
According to Cambridge University, Iran accounted for 0.12% of the Bitcoin (BTC) network’s hash rate and was previously among the top 10 countries in the world by BTC mining productivity. However, its share of the Bitcoin mining market fell from a peak of 4% in the years prior, partly due to a severe power shortage in the summer of 2021.