Authorities Confront Widespread Illegal Mining
Iran’s cryptocurrency mining industry is grappling with an extensive network of unlicensed operators, with government officials estimating that more than 95% of the country’s 427,000 mining devices are running without authorization.
Akbar Hasan Beklou, CEO of the Tehran Province Electricity Distribution Company, said on Sunday that Iran has become the world’s fourth-largest crypto mining hub, driven by its subsidized electricity rates. Those subsidies have turned the country into a “paradise for illegal miners,” he said, adding that these operations are putting the national grid under severe strain.
According to Beklou, unlicensed miners consume over 1,400 megawatts of power continuously, an amount that threatens the stability of electricity supplies nationwide. Many operators disguise their farms as industrial facilities to gain access to cheaper power, exploiting the system’s energy subsidies.
Investor Takeaway
Crackdown Expands Across Tehran Province
Authorities have intensified enforcement efforts in recent months. Beklou said that in Tehran Province alone, 104 illegal mining farms have been shut down, with 1,465 machines seized—roughly equivalent to the electricity use of 10,000 households. The government has identified key hotspots for illicit activity, including Pakdasht, Malard, Shahre Qods, and industrial zones in southwestern Tehran.
Inspectors have found mining farms concealed in warehouses, underground tunnels, and factory basements, all using subsidized electricity to bypass detection. Specialized inspection teams are now coordinating with police to dismantle these operations and trace power theft to its sources.
The large-scale enforcement campaign follows years of complaints from industrial and residential users about recurring blackouts during periods of peak mining activity. Energy officials say illegal crypto farms have been a major factor behind electricity shortages since 2019.
Authorities Offer Cash Bounty for Tip-Offs
To help curb the problem, Iran’s government introduced a cash reward program in August encouraging citizens to report unauthorized miners. Mostafa Rajabi Mashhadi, CEO of state-run utility Tavanir, said informants would receive 1 million tomans (about $24) for every illegal mining device reported.
The incentive comes as officials seek to involve the public in tracking the spread of underground crypto farms. Iran’s vast geography and the profitability of Bitcoin mining under subsidized energy conditions have made full enforcement difficult. Power authorities estimate that despite periodic crackdowns, thousands of new machines are added each month.
Investor Takeaway
Iran’s Role in Global Bitcoin Mining
Despite the crackdown, Iran remains a key player in the global crypto mining landscape. A June report by CoinLaw ranked Iran fifth worldwide in Bitcoin hashrate distribution, accounting for about 4.2% of total computing power. The United States leads with 44%, followed by Kazakhstan at 12%, Russia at 10.5%, and Canada at 9%.
Cheap electricity has long made Iran attractive for miners, both legal and illegal. The government initially legalized crypto mining in 2019 as an industrial activity but has since tightened licensing requirements amid persistent energy shortages and U.S. sanctions restricting the country’s energy exports. Analysts say these conditions have driven many miners underground.
Beklou and other officials have warned that unless energy reforms are introduced, illegal operations will continue to multiply. “The power grid is under constant pressure,” Beklou said. “Without proper regulation and enforcement, the cycle will repeat.”
Iran’s next steps may determine whether it remains a major hub for crypto mining or becomes the latest jurisdiction to curtail the practice under mounting energy and regulatory pressure.
