Iran has been at war with Israel since June 13, but long before that, Tehran and other Iranian cities experienced regular power outages, despite that the country has some of the world’s largest oil and gas reserves.
Iran is among the nations that do the most bitcoin mining, an industry that involves the consumption of huge quantities of electricity.
Matthew Tasooji, a professor and lecturer in operations and supply chain management at California State University–San Marcos, told The Epoch Times that the Iranian government uses bitcoin to circumvent sanctions.
“It’s a very good ploy for the Iranian government ... because they can’t sell oil, but it can be converted to electricity and that can be converted to bitcoin,” Tasooji said. “Given that revenues generated from the bitcoin mining operation are reportedly funneled directly to the Islamic Revolutionary Guard Corps (IRGC), there is a plausible strategic rationale for Israel to consider targeting these sites.”
‘Legitimate Military Objectives’
Jurgita Lapienyte, editor-in-chief of Cybernews, told The Epoch Times: “Bitcoin is produced by computers essentially competing with each other to solve very complex cryptography problems, like puzzles. And for that, these computers and server farms are using a lot of power because they need to perform a lot of computations right at once. It is very, very power-hungry.”
In return for solving these mathematical problems, the miner earns bitcoin.
Tasooji said that if he were trying to mine for bitcoin on his own personal computer, his chances of succeeding were “trillions of times less” than winning the Powerball lottery.
“It’s almost impossible. So you have to have a whole bunch of computers with very specific chipsets,” he said.
Application-specific integrated circuit (ASIC) computers are used to solve the proof‑of‑work puzzle required to produce a bitcoin.
Tasooji said Iran was estimated to have 180,000 ASIC bitcoin miners and a large number of Chinese nationals employed in running mining farms.
Iran has a massive shortage of foreign currency and has been unable to sell its huge reserves of oil freely on the world’s markets to raise foreign currency.
Tasooji said the regime had tapped into its foreign currency reserves and depleted most of them, hence the need to mine bitcoin.
This week, Perez-Shakdam, who is director of the Forum for Foreign Relations, told The Epoch Times, “In 2025, that figure would be much higher.”
Perez-Shakdam said the IRGC was running a parallel economy and that bitcoin mining was part of that effort.
“Because the regime has been unable to pay Hamas and Hezbollah and all the rest of them, they are relying on bitcoin to do just that, and to try to replenish their coffers,” she said.
Tasooji said: “It’s very smart actually, what they have done, but it’s illegal, and it’s wasteful, for a country like Iran. We have outages on a daily basis all across Iran. Outages of between two hours to eight hours.”
Lapienyte said cryptocurrency was primarily used, in bulk, by countries that are trying to circumvent sanctions, such as Iran and North Korea.
“It’s one of the main ways to get around the economic sanctions,” she said.
Lapienyte said the concept behind cryptocurrencies such as bitcoin was beautiful and was designed to allow people to operate in a decentralized way, independent of the control of banks or state governments.
She said it had become an easy way for organized criminals and bad actors to avoid scrutiny from the international financial system.
Lapienyte said the Iranian regime was converting electricity into bitcoin, which it could use to barter with countries such as Russia, China, and North Korea, and with nonstate bad actors.
Mining a single bitcoin requires huge amounts of electricity.
Lapienyte said, “It is a good business to mine bitcoin, but it’s expensive because of the price of electricity, and when you get cheap electricity like in Iran, you run into a problem.”
‘Absolutely Ridiculous’ Energy Crisis
Perez-Shakdam said the energy crisis in Iran is “absolutely ridiculous.”“You would like to think that a country like Iran, with the energy resources that they have, would be able to generate [enough] electricity. And the worst part is they actually export it to Iraq, which is insanity,” she said.
Lapienyte said that although bitcoin mining is legal in Iran, the Iranian regime ran a strict licensing system and, in 2019, closed down several unlicensed server farms.
“They issued licenses to companies who would get electricity at a better rate, and then they would be required to sell the cryptocurrency to the government, to the central bank,” she said.
Tasooji said Iranian leader Ali Khamenei approved bitcoin mining in 2021. He said it is estimated that many of the mining farms were being run by the IRGC.
“It’s a lucrative business if the electricity is cheap, or free, and in Iran, the Revolutionary Guards don’t pay a dime for electricity,” he said.
Tasooji said the Iranian economy was in such a poor state that the local currency, the rial, was virtually worthless and the market rate for converting to the dollar was massively different from the official rate.
Perez-Shakdam said Iran’s economic and energy problems could easily be solved if only they were to give up what she called their “ridiculous pursuit” of a nuclear bomb, but she said the regime was “dead set on it.”
Tasooji said the long-term implications of bitcoin mining in Iran largely depend on the trajectory of the regime.
He said that although revenues from mining may provide supplemental income to the IRGC and regime elites, “their primary concern at this stage is likely not financial, but rather personal security and regime survival.”
“While cryptocurrency may play a role in evading sanctions and facilitating discreet transactions, it remains a secondary concern compared to their existential priorities,” he said.
