The green light from Iran’s cabinet comes about a week after a government committee gave its approval for cryptocurrency mining. The decision was taken this weekend, during a Sunday cabinet session chaired by Iran’s President Hassan Rouhani, according to the report.
Now classified as an industrial activity, cryptocurrency miners will be required to get licensed by Iran’s Ministry of Industry, Mines and Trade.
Cheap Iranian Electricity
Cryptocurrency mining has become popular in Iran due to low electricity prices. Miners have been taking advantage of subsidized energy, and the operations have reportedly led to a 7% increase in energy consumption in the country.
Iran’s extremely cheap electricity can cost as little as 0.5 cents per kWh — almost ten-times cheaper than most other countries. This means that even outdated mining hardware can still be profitable in the west Asian country.
However, these rates are unlikely to remain low as cryptocurrency miners are likely to be charged a higher rate than regular users. According to Mehr News Agency, the Iranian government intends to raise electricity prices for cryptocurrency miners to seven cents per kWh. This would bring rates closer to those in China.
Crypto Back-Up Plan
The move to recognize cryptocurrency mining as an industrial activity is seen as a back-up plan for Iran following the negative impact of the United States’ sanctions against the country.
Still, this decision doesn’t mean that cryptocurrency trading has been legalized. The government outlined that those engaged in the industry should bear responsibility for the risks without any guarantees from the government.
Initial plans to authorize cryptocurrency mining in the country emerged earlier this month when Abdolnaser Hemmati, the governor of the Central Bank of Iran, indicated that the Economic Commission had approved the idea, and it would be put forward for discussion by the Cabinet.
It seems that Iran is looking to leverage its low-cost energy offering to attract mining operations and incentivize profits to be re-invested locally, which is reflected in Hemmati’s statement:
“Mining of the international digital currencies should be done based on the price of electricity for export, he said adding, “What’s more important is that these mined currencies should be fed back to the national economic cycle.”
The authorities had cracked down on unauthorized mining earlier this summer, seizing approximately 1,000 Bitcoin miners set up in two former factories.