Iran is joining the race to industrialize cryptocurrency mining.
While facing a crisis of sorts with the U.S.-led sanctions against it, the country officially approved crypto mining activities in a meeting on Sunday.
This decision by Iran’s cabinet has opened up several fronts towards the country’s road to adopting the modern technology market and joining the mainstream.
Low Energy Costs the First Lure
The interesting part of this story is that Iran’s existing laws don’t recognize cryptocurrencies as legal tender for transactions in the country. Even cryptocurrency mining was not permitted until this cabinet decision reversed that position.
It is reported that the Iran government has been receiving requests from cryptocurrency miners to operate in the country but were not successful in convincing officials. One of the reasons for Iran’s high demand for crypto mining is that the electricity consumption charges in the country are among the lowest in the world. Only Burma has a lower figure.
Iran charges just $.03 USD per kWh (Burma’s is $.02). The global average in March 2019 was $.15, five times that of Iran. It has to be noted that the Islamic Republic government heavily subsidizes Iran’s energy production.
Crypto Miners Expected to Rush to Iran
Now that mining activities are officially approved in Iran, cryptocurrency miners from all over the world will want to take advantage of the opportunity. However, it’s worth noting that the cabinet decision does not mean automatic approval.
Those interested in setting up shop in Iran will have to apply for a cryptocurrency mining license to the Ministry of Industry, Mine and Trade.
Reportedly, the government of Iran may bump the rate of power consumption charges. It is likely to be pegged at $.07, still cheaper than many other countries.
Other Collateral Benefits
Now that Iran’s cabinet has permitted crypto mining, some experts and observers expect the government may use cryptocurrency to bolster its economy and circumvent sanctions imposed by the United States.
However, it’s worth noting here that the cryptocurrency mined by private operators cannot be put to use by the government, unless the government itself gets involved in mining the cryptocurrencies in some manner.
The Iranian authorities are also making it clear that there is no guarantee available to those engaged in cryptocurrency mining either from the banks or from the government. This means that the risk associated with cryptocurrencies will have to be handled by the operators themselves. Another aspect that will be watched with interest from outside of Iran is the quantity of cryptocurrencies to be mined by these new operators and how this quantity can affect the prices of cryptocurrencies. The digital currency industry has seen such wild fluctuations in its prices whenever large quantities of the currency have been let loose in the market.