According to several sources, the government of Iran has started issuing crypto mining licenses to more than one thousand companies in the country. The licenses were issued by the Ministry of Industry, Mines and Trade which was subsequently the ministry responsible for regulating all of the existing crypto mining operations in the country.
However, the crypto mining regulation was not nearly as large as it became today due to several issues with the local government. You see, Iran has a complete ban placed on cryptocurrency trading activities, making crypto mining an unintended target as well.
However, after the country became a hub for crypto mining entrepreneurs, the government had to change its very strict stance to a more forgiving one if it ever wanted to benefit from this new technology.
Iran’s history with crypto
In the early 2010s, Iran’s government introduced a new bill that subsidized commercial use of electricity for the Iranian population. However, it was designed to help Iranians avoid any serious costs when it came to utilities, thus being a populistic idea, but a beneficial one.
However, after the 2017 crypto boom, Iran started experiencing serious electricity shortages due to increased consumption. In the beginning, it was very hard to pinpoint the reason why this was happening, but soon enough local authorities discovered hundreds of crypto mining farms dotted around the country utilizing the subsidies on electricity.
These companies were making millions of dollars in pure profit with very little overhead. The electricity was almost not a cost at all. But there was a serious issue in terms of a relationship with the government. These crypto mining companies were not paying any taxes because they were:
- Not recognized as official businesses
- Not registered with the local authorities
- Did not possess the license to legally mine cryptos
This led from one misunderstanding to another but finally culminated into the Iranian government passing law that recognized crypto mining as an industry, but required mining companies to register with the relevant ministry. In this case, it was the Ministry of Infrastructure, Mining, and Trade.
But, despite such a massive legal move, crypto trading in Iran still remains outside of the law.
The reason is tied to the conflict with the United States
Such a sudden move to legalize more than a thousand companies that tend to be extremely profitable seems to be quite an uncharacteristic move from Iran. However, governments make quite weird decisions when they are desperate.
Over the years, Iran’s economy has been suffering tremendously due to the United States sanctions. They are barely able to find somebody to sell oil to and the exporting market is going further and further down.
Iranian investors are always looking for opportunities to take their capital outside of the country and settle somewhere else as the local market is extremely unreliable.
Overall, Iran’s economy was going even further downhill after the recent conflict with the United States. Further sanctions were on their way that had the potential of being the last nail in the coffin.
Legalizing 1000 crypto miners that primarily deal with an asset that is decentralized and is not tied to a single entity seemed like the perfect way to shore up the financial defenses of the country.
No matter what the United States may trie to do regarding cryptocurrencies, Iran will still have the guarantee of an unhinge market supporting its crypto mining companies and subsequently its economy as well.
The people need diversification as well
Although the government may have access to new funds coming from the mining industry its people will still have to deal with the crippling depreciation of the Rial in the coming future. In order to somehow maintain control of the population (which is already starting to challenge the authority of the Iranian government), some changes will have to be made for retail crypto traders as well.
It’s likely that Iran will reverse its crypto trading ban in the hopes of keeping not only the government economy but the retail economy in check as well.