EghtesadOnline: The Economic Commission of the government has agreed to set electricity prices for mining cryptocurrencies based on similar tariffs used for electricity exports.
Homayoon Ha’eri, the Energy Ministry deputy for power and electricity, made the statement Sunday, adding that the decision is awaiting final approval by the Cabinet, ISNA reported.
Ha’eri did not reflect on the rates approved by the commission. However, he noted that electricity export prices are variable and based on a variety of factors, such as fuel prices in the Persian Gulf region.
The head of Iran Electrical Industry Syndicate, Ali Bakhshi, announced earlier that the ministry had proposed 7 cents for each kilowatt-hour of electricity used for crypto mining, Financial Tribune reported.
Ha’eri emphasized that those involved in mining cryptocurrency have to receive special permits, warning that unauthorized operators will face power cuts.
Cryptocurrency mining in Iran has become a lucrative business in recent years due to the extremely low-cost electricity. Each kilowatt-hour currently costs 0.5 cent. Electricity is cheaper in the industrial and agricultural sectors.
Crypto mining is a kind of energy arbitrage. Miners make money when the cost of producing coins is lower than the operation of the mine itself. Unlike real-world money that is printed when more is needed, cryptocurrency has to be mined through mathematical processes.
With cryptocurrency mining taking a toll on Iran’s electricity industry, energy authorities have voiced concern about the mounting pressure on the power grid, in particular in the hot summer months.
They say mining cryptocurrency using cheap electricity is a visible example of wasting national resources.
Mostafa Rajabi Mashhadi, the Energy Ministry spokesman for the power department, earlier said that the production of a single unit of bitcoin uses about 200 million rials ($1,400) in state subsidies.
Production of each bitcoin uses the same amount of electricity as 24 buildings in Tehran a year, or one building’s consumption for 24 years.
According to media reports, the government paid $16.5 billion in subsidies in 2018 to plug the huge gap in real energy costs and the bills sent to consumers.