The Iranian government has blamed Bitcoin for the massive power grid blackouts across the country that left millions of people in darkness.
Iran’s capital and other cities in the country have suffered vast blackouts and intense air pollution over the past few weeks, leaving millions without electricity for hours. Cities across Iran have been cloaked in thick layers of toxic smog and darkened by blackouts, exacerbating an already serious phase of the coronavirus pandemic. Surprisingly, the government pointed out an unlikely culprit: Bitcoin. Yes! Bitcoin came out to be an easy victim here.
The Iranian government has blamed Bitcoin and other forms of cryptocurrency for the power grid troubles that left millions of people in darkness. Controversy erupted after the senior officials in Iran held the Chinese mining of cryptocurrencies responsible for the power failure in the country as well as for the rising pollution.
Meanwhile, it is also reported that power stations in Iran have also been deprived of natural gas due to its intense consumption, leading plants to reportedly turn to lower quality, polluting fuel that has caused a thick layer of smog to blanket the capital city of Iran, Tehran and other locations.
With a wide population forced into darkness, the government launched a crackdown on Bitcoin processing centres, as they require immense amounts of electricity to power their specialised computers and to keep them cool. As per the government of the country, the amount of electricity used by the Bitcoin processing centres is actually burdening Iran’s power grid, and therefore, the country is suffering from major power outages.
Bitcoin mining blamed for electricity outrage in Iran
According to reports of Iranian media, the major reason behind the power outage in Iran is cryptocurrency mining. The cryptocurrency bitcoin is often considered notorious for its famished appetite for electricity and accounts for around 0.2 percent of global electricity use. Even though bitcoin solely exists in digital zeroes and ones, the computers that run the network are huge energy consumers.
It’s a well-established fact that Bitcoin requires a huge amount of electricity, used by miners around the world running the computer hardware necessary to maintain the network and validate payments. Since Iran is among the top 10 countries with the most Bitcoin mining capacity in the world, this virtual currency uses around 450 megawatts of power a day of the country.
According to various reports, the government in Iran has shut down approximately 1,600 Bitcoin centres across the country, including the ones which are legally authorised. It was in 2018 after former US President Donal Trump reimposed sanctions on Iran, the cryptocurrency surged in popularity in the Islamic Republic. Iranians, however, understand the value of anonymous online transactions made via cryptocurrencies as in recent years these virtual currencies have become the de facto means of making global payments for them.
How Bitcoin uses huge amounts of electricity?
Bitcoin is a virtual currency traded without the use of a bank and can be used to anonymously buy a variety of items. It can be created by ‘mining’, which involves cryptocurrency experts solving complex maths problems using computer processors usually requiring huge amounts of electricity.
Iran today, has become a hub for cryptocurrency mining as a result of the cheap electricity it provides, which costs just 0.5p per kilowatt-hour compared to an average of 14.4p in the UK. But this secretive technology has become attractive to Iranians as it allows for payments outside the traditional banking system, offering a means of bypassing US economic sanctions.
Bitcoin: Iranian regime’s scapegoat
The main question after all this controversy arises is that is Bitcoin really to blame for the electricity grid failure in Iran? This question is important while at the same time necessary as Bitcoin or any cryptocurrency mining in Iran only accounts for less than two percent of the country’s energy usage.
Many are trying to give this issue a political angle by believing the fact that this step of the Iranian government of shutting down Bitcoin centres is an attempt to marginalise Chinese influence in the country.
Critics are also arguing that Bitcoin is simply becoming the Iranian regime’s scapegoat for not only the blackouts in the country but also for rising air pollution. It is being believed that Bitcoin is becoming an easy target in the country and the government is using it for hiding the bigger issues under the couch.