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Proof-of-Work, the consensus mechanism powering the Bitcoin network, has been criticized for its extensive power usage. The balance between the energy-draining mining process and network assurance is an open debate. Evidence indicates the global Bitcoin mining power consumption is equal to the power consumption of Argentina. Iran, one Bitcoin mining hub, ceased mining operations in May after several power blackouts.
Iran is Saying Yes to Mining
Iran will no longer restrict Bitcoin mining in the country. A report from The Financial Tribune in Iran notes that mining operations will resume starting this autumn. More specifically, the ban imposed by the Ministry of Industries, Mining, and Trade will be lifted beginning on September 22nd.
Former President Hassan Rouhani imposed the mining ban after the country’s power supply was put under strain due to high power consumption. As the report notes, crypto miners were to blame for the sudden blackouts in Tehran, damaging power distribution locales during the summer. In addition, Tavanir reported mining equipment seizures which caused over $426,641,382 in lost revenue and damages.
Iran legally approved Bitcoin mining in July 2019, requiring mine operators to purchase licenses from the Ministry of Industries and accept electricity bills at export rate prices. Iran issued 30 mining licenses; however, Financial Tribune reports indicate 85% of the total mining consumption comes from unlicensed mines, which use between 2,000-3,000 MW per day, half of Tehran’s power consumption.
Get a head start and read the flipside about Iran to Become Bitcoin Mining Friendly After September
Hashrate Set to Explode Again
Following the Chinese mining exodus, the global network hashrate experienced a downward spiral. Data tracking the global Bitcoin hashrate indicated a drop of 50% by June 30th. This showed that Chinese mining hegemony was no longer a threat, as miners sought alternative facile mining locations, considering places like the U.S., Kazakhstan, Russia, and Latin America.
Before the May ban, Iran accounted for 4.5% of the total global hashrate. As mining pool operators in the U.S. continue to depict themselves as the central hub for mining, they have not considered the number of mining machines still displaced. According to Forbes, the U.S. is facing fierce hashrate competition across the globe, where mining is incentivized.
The global narrative concerning Bitcoin mining and its environmental impact has decreased as the Fear and Greed Index signalled a turn towards greed and institutional interests seeking more financial possibilities. The Bitcoin Mining Council reported Bitcoin turned “greener” in June, with 56% of mining being renewable energy. However, places like Kazakhstan and Iran, where miners are relocating, still rely on fossil fuels.
Vincent Vuong notes miners are still bullish on the price of Bitcoin and are reluctant to sell their machines. Despite criticism about Bitcoin’s environmental impact, Bitcoin mining will continue to strive. Controversy and environmental disengagement will occur as long as profits are made from trading, speculating, and ultimately mining it.
