Iran is currently facing a severe energy crisis, and an unprecedented heat wave is only making the situation worse. In a bizarre attempt to address the problem, the Iranian government has just announced a $20 bounty for citizens who act as informants on illegal cryptocurrency mining operations in the country.

One state-owned electricity company has already begun this campaign: Tavanir. The company is fighting the unauthorized consumption of subsidized electricity, which officials say contributes to the persistent power shortages plaguing the country.

Heat wave and power shortages

The current heat wave has pushed temperatures in Iran to a scorching 49.7°C, or 121°F, the hottest period in 50 years. This has led to widespread power outages, affecting daily life and industrial production.

Tavanir Chief Executive Mostafa Rajabi Mashhadi now says that the illegal miners are simply taking advantage of the situation and consuming a lot of electricity without permission. He said that these operations were not only small, they were consuming electricity equivalent to the needs of an entire province, putting an unbearable strain on the national grid.

Source: Elliptic

The Iranian government previously banned cryptocurrency mining in 2021, citing similar concerns about the massive energy consumption. The government later lifted the ban, at least partially, due to economic pressure from U.S. sanctions.

Now that the grid is under pressure, officials are taking an even tougher stance, arguing that encouraging citizens to report illegal miners could help alleviate some of the pressure on the electricity supply.

A view of Iran. Image: European Parliament

The Bounty System

This new bounty system pays one million tomans for information leading to the seizure of unauthorized hardware for mining operations. According to reports, the financial incentive is intended to encourage citizens to take action against illegal miners, who often set up shop in public buildings such as schools and mosques. These are locations that benefit from subsidized electricity and have therefore been a prime target for unauthorized mining operations.

Reports say more than 230,000 illegal mining devices have already been seized, consuming 800 to 900 megawatts of power. To put that into perspective, local authorities compared the consumption to the electricity needs of Markazi province and stressed that providing that much electricity would require the construction of a new 1,300 megawatt power plant.

The broader implications

The Iranian government is cracking down on illegal cryptocurrency mining as part of a broader effort to properly manage the country’s energy resources. While crypto mining can be very rewarding, it has serious implications for energy consumption and environmental sustainability.

Some critics argue that it is completely misplaced to see cryptocurrency mining as the main cause of the shortage of power supply. Some experts argue that the real problems lie in the mismanagement of the grid and the huge investments that are required for it.

Crypto mining has exploded in Iran in recent years, thanks to its abundance of natural gas and electricity. Yet crypto mining has created a complex relationship with cryptocurrency, allowing the country to both circumvent sanctions and overburden its energy supply.

Main image of ASIC Jungle, chart from TradingView