New Iranian bill to support Bitcoin mining and ban crypto payments

• The parliament of Iran proposed new legislation to centralize and regulate cryptocurrency use, licenses to be issued to Bitcoin mining farms
• Iran plans to issue a national cryptocurrency for domestic transaction settlement and impose a ban on the use of cryptocurrencies mined outside Iran
• Licensing of Bitcoin mining operations may tackle the persistent blackouts that result from illegal mining operations consuming excess electricity

After a crackdown on Bitcoin miners, the government of Iran is now taking steps to license these operations. The blanket ban on cryptocurrency mining may be lifted soon.

Central Bank of Iran attempts to counter capital flight 

Iran’s economy is in a crisis following the collapse of oil exports, systemic corruption, and mismanagement spanning decades. The economic turmoil has impacted the national currency, the Rial, which has severely depreciated against the dollar ever since the former U.S. President Donald Trump withdrew from the nuclear deal in 2018. 

Since then, the Central Bank of Iran (CBI) has been strapped for foreign currencies and attempted to counter capital flight by implementing a blanket ban on the use of cryptocurrency mined outside Iran. 

The ban served as an opportunity for Iran to expand power plant infrastructure and run repairs on existing power grids to try to lessen the impact of the crypto-rush. Several unlicensed mining firms have been operating around the nation since the cost of electricity is about $0.003/kWH, roughly forty times cheaper than the world’s average of $0.14/kWh. 

President Hassan Rouhani said, 

For legalizing the activity of cryptocurrencies and protecting people's capital in this area, we must think of a solution as soon as possible and lay down and communicate the necessary laws and instructions.

Interestingly, the proposed bill further suggests that Iranian cryptocurrency miners will be allowed to construct and operate new power plants by acquiring special permits from the Ministry of Energy. These companies can then sell the surplus energy generated by their stations to the Ministry. 

The new regulations might affect the profitability of Bitcoin mining operations nationwide since utility costs, including electricity, are expected to rise. Still, the Iranian authorities are offering miners the opportunity to profit further by the sale of surplus electricity.

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