Report: Iran’s annual revenue from bitcoin mining could exceed $1 billion

Iran uses bitcoin to pay for imported goods and circumvent oil sanctions.

Despite Iran’s on-again, off-again regulatory relationship with bitcoin, a new report from blockchain analytics firm Elliptic suggests that regulated mining activity could generate more than $1 billion in annual revenue and help the country circumvent economic sanctions imposed by the United States.

Excerpts from the report, published yesterday, point to research showing that Iran now accounts for 4.5 percent of the total global bitcoin mining business, bringing in hundreds of billions of dollars, which are being used to circumvent the oil embargo in particular.

The report states, “The United States has imposed a near-total economic embargo on Iran, including a ban on all imports of Iranian goods and sanctions on Iranian financial institutions. Over the past decade, Iran’s oil exports have plummeted by 70 percent, plunging it into a period of severe economic recession, soaring unemployment and civil unrest.”

“In the face of these sanctions, Iran has turned to an unlikely solution – bitcoin mining.”

The report notes that cheap and abundant oil means that energy-intensive mining operations are relatively inexpensive for Iran. As a result, foreign investors are playing a key role in the country’s expanding crypto economy, sometimes with the help of the Iranian military.

Several Chinese companies have been granted mining licenses and are already operating in the country,” the report reads. These companies claim to have established good relations with the ‘Iranian military,’ and a particularly large mining facility in the Rafsanjan Special Economic Zone was reportedly built in cooperation with a ‘military organization.'”

Ultimately, the bitcoins produced by these state-sanctioned mines could be used to help the country sell oil through proxies: excess energy and oil is used to produce bitcoins, which can then be sold on the global market.

The report also notes that this dynamic “has almost become an official policy.” In late April, Iran passed a law allowing banking entities to use cryptocurrencies to purchase imported goods, and then in May, the Iranian government appeared poised to tighten its grip on cryptocurrencies and attempt to pass a law banning the use of bitcoins mined in foreign countries for import payments.

While bitcoin now appears to be a key component of Iran’s global trade strategy, the country’s official relationship with bitcoin hasn’t always been so good. In January, Iranian officials tried to blame local power outages on illegal mining operations (though experts say a dilapidated power grid is more likely the culprit), and yesterday reports emerged that the country is using intelligence agencies to raid illegal mining sites.

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