Iran’s Government Officially Legitimises Crypto Mining
According to an announcement made by the Iran chamber of commerce on the 29th of July 2019, the government of Iran has officially given the green light to cryptocurrency mining in the country. The governor to the Central Bank of Iran noted that:
“A mechanism to mine digital coins was approved by the government's economic commission and will later be put to a discussion at a cabinet meeting.”
The report clearly states that the government of Iran will not be in any way responsible for the risks anyone encounters when investing in cryptocurrency mining. The banking system also provides no guarantees to miners.
Just like other industries, cryptocurrency mining is now taxable. Both companies and individuals are expected to pay tax for their mining activities. The only exception to this rule is those who export cryptocurrency and bring the revenue back to Iran.
So what will be the implication of this official nod? Should we expect a home run for the blockchain and cryptocurrency industry in Iran?
Well, Iran’s recent announcement is an official acknowledgement of cryptocurrency mining as a legally recognised industry in the country. It also paves the way for further legal clarification and framework.
It is, however, worth noting that it is still illegal to use any form of digital currency in internal transactions.
Before the chamber of commerce announcement, the Iranian government had been tottering on the edge of legalisation for awhile. They had, for example, seized and closed several major cryptocurrency mining firms over the past months.
What about the high electricity costs?
With the power-intensive nature of electricity mining in mind, it is easy to see why there is so much apprehension towards the legalisation of cryptocurrency mining in Iran.
The financial tribune, in an article dated 30th of June 2019, noted that it costs about $1400 (USD) in state subsidies to mine a single unit of Bitcoin. The report also pointed out that this excessive consumption of power is taking a toll on the national power grid.
Nonetheless, Iran is one of the most cost-effective countries to mine cryptocurrency. Why? Because of the giant subsidies granted for power generation. For example, according to the International Energy Agency, the country spent more than $45.1 billion (USD) to subsidise fossil energy consumption in 2017.
The subsidised electricity in Iran has nurtured the industry and led to the setting up of more and more mining firms.
The growing power consumption, resulting from the increase in the number of miners, has not gone unnoticed by the government. The minister for energy recently proposed a new tariff scheme for miners. Currently, Iranians pay approximately $0.01 (USD) for a kilowatt-hour of electricity consumption. However, the minister did not disclose what the proposed pricing for miners was.
What are your thoughts about the decision to legitimise cryptocurrency mining in Iran? Feel free to share your thoughts in the comments section below.
About the author:
Jay Jackson is a blockchain enthusiast and a freelance writer at topcryptowriter.com. He works closely with brands (people, businesses and startups) in the crypto sphere. He currently writes Blog posts, Guides, Press releases, ICO reviews, eBooks & Whitepapers. You can find him on LinkedIn.
Disclaimer: The above references an opinion and is for informational purposes only. Do not take this as personalised financial or investment advice. The opinions expressed by the author do not represent the opinion of BitPrime.
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Last updated: 31/07/2019