To keep up with the energy demand in the harsh winter, the Iranian government has asked crypto miners to cease operations. This is part of the government’s efforts to tackle power shortages in the cold months and avoid an electricity deficit. However, this will hit Iran’s thriving crypto industry.
According to the Financial Tribune, the Iranian power generation company Tavanir recently ordered licensed crypto mining companies to disconnect their hardware from the grid. Mostafa Rajabi Mashhadi, Tavanir’s spokesperson, said this was part of the company’s efforts to monitor electricity usage. He believes that doing so will help prevent blackouts in winter.
A similar decision had been taken by Iranian authorities in May urging crypto miners to stop operations. The reason had then been inadequate supplies, hot and dry weather hitting the electricity demand. Restrictions were lifted in September.
Cryptocurrency is Power-Hungry
Cryptocurrency mining consumes a lot of electricity, with Cambridge researchers saying it takes up 121.36 terawatt-hours (TWh) a year. It involves heavy computer calculations.
Michel Rauchs, a researcher at The Cambridge Centre for Alternative Finance, says the price of cryptocurrency and energy consumption is co-related. When the price increases, the energy consumption also increases. According to Cambridge’s Bitcoin Electricity Consumption Index, the Netherlands consumes far less power than cryptocurrency.
Mining a cryptocurrency, let’s take bitcoin as an example, is intriguing. Puzzles have to be solved. This means that no one fraudulently edits the global record of all transactions. As a reward, miners receive small amounts of bitcoin. The process is accomplished by a team or network of miners. As such, it involves lots of electricity, computer hardware, and code-breaking minds!
It should be noted that due to the high power consumption, crypto miners have faced backlash in China, Russia, and Kazakhstan.
