With 95% of mining operations running illegally and consuming enough power to light up entire cities, Iran’s crypto boom is pushing an already fragile power grid to the breaking point.
A Nation Turning to Digital Currency
Iran’s cryptocurrency interest exploded after 2017 when international sanctions cut off access to global banking systems. Unable to use traditional finance, the country turned to Bitcoin and other digital currencies as a way around restrictions.
Today, Iran controls about 4.2% of global Bitcoin mining power, ranking fifth worldwide behind the United States, Kazakhstan, Russia, and Canada. This is a major drop from March 2021 when Iran held 7.5% of the global hashrate, but it still represents significant operations.
The appeal is simple: electricity in Iran costs between $0.01 and $0.05 per kilowatt-hour, making it incredibly cheap to mine Bitcoin. With costs as low as $1,300 to mine a single Bitcoin that can sell for over $100,000, the profit margins are enormous.
Around 22% of Iran’s population now uses or owns cryptocurrency, with an estimated 10 million users in the country. For many Iranians facing severe inflation—the rial lost 37% of its value against the dollar in 2024 alone—crypto offers a way to protect savings from collapse.
The Illegal Mining Problem
Iranian officials report that approximately 427,000 active crypto mining devices operate across the country. The shocking part? An estimated 95% are illegal, operating without proper authorization.
These underground operations consume roughly 2,000 megawatts of electricity—equal to what two nuclear reactors produce. Energy officials say crypto mining now accounts for 15-20% of Iran’s electricity shortage problems.
The illegal miners hide their operations everywhere: abandoned homes, rural farms, underground tunnels, and even industrial facilities disguised as legitimate businesses. During one internet outage related to conflict with Israel, power consumption dropped by 2,400 megawatts when over 900,000 illegal mining devices shut down, revealing the true scale of the problem.
Licensed miners face high electricity tariffs that make legal operations unprofitable, pushing most miners underground. Meanwhile, many operations linked to Iran’s Islamic Revolutionary Guard Corps (IRGC) reportedly use electricity for free, further straining the grid.
In Tehran Province alone, authorities have dismantled 104 illegal mining farms and seized 1,465 machines—enough to power nearly 10,000 households. Across the country, over 250,000 illegal devices have been confiscated. The government now pays citizens about $24 to report illegal mining operations, turning regular people into informants.
Government Control and Crackdowns
Iran legalized cryptocurrency mining in 2019, seeing it as a way to generate revenue despite sanctions. However, the government imposed strict rules: licensed miners must sell their Bitcoin directly to Iran’s Central Bank.
In December 2024, the Central Bank suddenly blocked all cryptocurrency-to-rial transactions on websites. By January 2025, the government reopened these channels but only through a controlled system requiring full access to user data. In February 2025, Iran banned all cryptocurrency advertising both online and offline.
The government walks a fine line. Crypto mining offers an economic lifeline and helps bypass sanctions, but the massive power drain threatens grid stability and sparks public anger during blackouts.
Sanctions Evasion and International Response
In 2024, sanctioned countries and entities including Iran received $15.8 billion in cryptocurrency, making up 39% of all illicit crypto transactions worldwide.
Networks helping Iran sell oil facilitated over $100 million in cryptocurrency transfers between 2023 and 2025, with broader networks handling more than $600 million total. The U.S. Treasury’s Office of Foreign Assets Control has intensified crackdowns, sanctioning individuals and companies in China, Hong Kong, and the UAE connected to these operations.
The IRGC uses cryptocurrency to fund activities and support regional proxy groups. In 2022, the U.S. sanctioned two Iranians linked to the IRGC for using crypto exchanges to launder money from cyberattacks.
The Nobitex Hack: Crypto Warfare
On June 18, 2025, Nobitex—Iran’s largest cryptocurrency exchange—suffered a massive hack. Pro-Israel hacker group Predatory Sparrow stole over $90 million in Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies.
The attack was politically motivated. Instead of keeping the stolen crypto, the hackers sent it to inaccessible wallet addresses containing anti-IRGC messages, effectively destroying the money as a political statement.
Nobitex handles over $11 billion in transactions, more than the next ten largest Iranian exchanges combined. Past investigations linked the exchange to sanctioned IRGC operatives and wallets associated with Hamas, Palestinian Islamic Jihad, and Houthi groups.
The hack came during escalating tensions between Israel and Iran, demonstrating how cryptocurrency infrastructure has become a target in modern geopolitical conflicts. When U.S. forces struck Iranian nuclear facilities shortly after, Bitcoin’s global hashrate dropped 15%—the sharpest decline in three years—fueling speculation about disrupted Iranian mining operations.
The Road Ahead
Iran’s cryptocurrency industry exists in a challenging space between economic necessity and practical constraints. Experts estimate Iran has mined between 60,000 and 200,000 Bitcoin since 2018, though exact numbers remain uncertain since 85% of operations are underground.
As economic pressures mount and the rial continues losing value, more Iranians turn to cryptocurrency. Crypto outflows from Iran surged to $4.18 billion in 2024, up 70% from the previous year, as people moved money out of the country’s unstable currency.
The government faces competing interests: crack down on mining to save the power grid, or allow it to continue as an economic tool for sanctions evasion. Meanwhile, international enforcement agencies grow more sophisticated at tracking crypto transactions and disrupting Iranian financial networks.
Source: https://bravenewcoin.com/insights/irans-bitcoin-mining-industry-inside-the-worlds-fifth-largest-operation-amid-sanctions-and-energy-crisis
