You are currently viewing Iran uses crypto mining to lessen impact of sanctions, study finds – Reuters

Iran uses crypto mining to lessen impact of sanctions, study finds – Reuters

Representations of the virtual currency Bitcoin stand on a motherboard in this picture illustration taken May 20, 2021. REUTERS/Dado Ruvic/Illustration
LONDON, May 21 (Reuters) – Around 4.5% of all bitcoin mining takes place in Iran, allowing the country to earn hundreds of millions of dollars in cryptocurrencies that can be used to buy imports and lessen the impact of sanctions, a new study has found.
At its current level of mining, Iran's bitcoin production would amount to revenues close $1 billion a year, according to figures from blockchain analytics firm Elliptic.
Iranian officials could not immediately be reached for comment.
The United States imposes an almost total economic embargo on Iran, including a ban on all imports including those from the country's oil, banking and shipping sectors.
While, exact figures are "very challenging to determine", Elliptic estimates are based on data collected from bitcoin miners by the Cambridge Centre for Alternative Finance up to April 2020, and statements from Iran's state-controlled power generation company in January that up to 600 MW of electricity was being consumed by miners.
Bitcoin and other cryptocurrencies are created through a process known as mining, where powerful computers compete with each other to solve complex mathematical problems. The process is energy intensive, often relying electricity generated by fossil fuels which Iran is rich in.
The country's central bank prohibits the trading of bitcoin and other cryptocurrencies mined overseas, although the currencies are widely available on the black market, according to local media reports.
Iran officially recognized crypto mining as an industry in recent years, offering it cheap power and requiring miners to sell their mined bitcoins to the central bank. The prospect of cheap power has attracted more miners, particularly from China, into the country. Teheran allows cryptocurrencies mined in Iran to pay for imports of authorised goods.
"Iran has recognised that bitcoin mining represents an attractive opportunity for a sanctions-hit economy suffering from a shortage of hard cash, but with a surplus of oil and natural gas," the study finds.
The electricity being used by miners in Iran would require the equivalent of around 10 million barrels of crude oil each year to generate, around 4% of total Iranian oil exports in 2020, according to the study.
"The Iranian state is therefore effectively selling its energy reserves on the global markets, using the Bitcoin mining process to bypass trade embargoes," the study reads.
"Iran-based miners are paid directly in Bitcoin, which can then be used to pay for imports – allowing sanctions on payments through Iranian financial institutions to be circumvented."
Financial firms that have started offering cryptocurrency services, particularly in the United States, should consider potential sanctions they are exposed to due to Iranian bitcoin mining, Elliptic said.
Our Standards: The Thomson Reuters Trust Principles.
Sign up to our tech newsletter to get the latest news and trends in the global technology industry.
Subscribe to our newsletter to get all the news you need to start your day.
Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.
Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology.
The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs.
The industry leader for online information for tax, accounting and finance professionals.
Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile.
Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts.
Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.
All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.
© 2022 Reuters. All rights reserved

source

Leave a Reply