After a thorough and much hyped top level governmental cabinet meetings related to bitcoin mining, Iran has finally authorized bitcoin and other cryptocurrency mining as an industrial activity. Now, the Ministry of Industry, Mine, and Trade will be providing licenses to the miners before they could start crypto mining.
Following the move, there are several changes imposed for people affiliated with cryptocurrency mining. Furthermore, crypto mining will be taxed by the government of Iran. However, if the profits are brought back to the country by the miners somehow by exporting tokens abroad, then miners wouldn’t be taxed. As Iran continues with its bitcoin ban, the use of bitcoin or any other foreign asset is not allowed for settling payments. Hence, miners need to export tokens for getting relieved of the tax.
For miners, there are a few other clarifications made by the country as well. For instance, the Iranian government has told that no legal support will be provided to the miners. At the moment, the price rate for miners is 2 cents per kilowatt-hour (kWh) but soon the government will revise this rate. It was revealed that the rate after rising up by a few cents will be around 7 cents per kWh.
Bitcoin mining is of utmost importance process for the bitcoin network. Transactions details are stored on every node in the bitcoin network. To verify transactions so that new blocks can be added to the existing blockchain, the process of mining comes into action.
As miners verify the transactions, there is no need for a central authority to supervise any of the transactions. That’s why bitcoin is truly secured very much decentralized. In return, miners get awarded for verifying and processing the transactions on bitcoin network. At the moment, the miners get 12.5 bitcoin for successfully adding a block to the network.
The latest move by the country was not unexpected as previously, BlockPublisher reported Iran legalizing bitcoin mining. The governor of Iranian Central Bank (CBI), Abdolnaser Hemmati revealed that the country was on the move for authorizing crypto mining. In the past, he told that the matter of devising law for authorizing crypto mining would be under discussion at the Cabinet meeting. In this regard, his exact words read:
A mechanism to mine digital coins was approved by the government’s economic commission and will later be put to discussion at a Cabinet meeting.
Although Iran is now supporting cryptocurrency mining in the country, last month, the situation was very different. Bitcoin miners in Iran faced a severe crack down and were strictly asked to stop their mining practices. Since domestic electricity is extremely cheap, bitcoin miners were attracted to the Iranian land. Because of mining, the Ministry of Energy’s representative, Mostafa Rajabi Mashhadi stated that several problems were rising.
In addition to the unstable grid, the country was facing electricity revenue shortfalls that forced the government to take strict action against illegal bitcoin farms and police confiscated numerous mining rigs.
The perception and image of bitcoin and other cryptocurrencies was portrayed so negative in Iran that the cryptos were declared as ‘Haram’, religiously forbidden, by many. As per Iran’s Minister for Information and Communications Technology Mohammad Javad Azari Jahromi who elaborated:
Some of our top clerics have issued fatwas (a ruling on a point of Islamic law given by a recognized authority) that say bitcoin is money without a reserve that it is rejected by Islam and cybercurrencies are haram. When we explain to them this is not a currency but an asset, they change their mind.
Iran was under immense pressure after the U.S. President Donald Trump announced sanctions against the Iranian economy a year ago and abandoned its support in Iran’s nuclear deal with other major countries. Iranian assistant minister of industry, trade and supply, Saeed Zarandi even mentioned that efforts were laid by the U.S. Congress to stop Iran’s access to bitcoin mining and cryptocurrencies. According to the minster, as cryptocurrencies could help Iran to evade sanctions, the Congress was keen on hindering Iran’s access to cryptos.
One of the cheapest places in the world for bitcoin mining, Iran has finally recognized the need for authorizing cryptocurrency mining. The profitable business for miners based in Iran will be now supervised by the government itself. Against all odds, bitcoin mining has now been approved in Iran and in the future, it would of be of immense interest for other struggling countries to jump into crypto mining to save their crumbling economies.