Why Did Bitcoin Hashrate Plummet After the U.S. Attacked Iran’s Nuclear Facility? Was Iran Mining Bitcoin? Here Are Estimates of Its Bitcoin Holdings

Iran has turned to cryptocurrency mining and trading since 2019, as its local currency has been devalued due to years of harsh international sanctions and high inflation. But experts say it is still nearly impossible to give an accurate estimate of how much Bitcoin (BTC) the country has mined.

According to data from the University of Cambridge’s Centre for Alternative Finance in March 2021, Iran accounted for 7.5% of the global Bitcoin mining hashrate. This fell to just 0.12% in January 2022.

Andrew Scott Easton, CEO of Bitcoin mining investment firm Masterminded, estimates that Iran has historically mined around 60,000 BTC. That’s roughly $6.4 billion at current prices. Sazmining CEO Kent Halliburton, on the other hand, says Iran may have mined between 100,000 and 200,000 BTC since 2018, and that the amount could range from $10.7 billion to $21.4 billion. The fact that Iran began granting legal permits for crypto mining in 2019 increases the importance of this period.

But forecasts are complicated because much of Iran’s mining has moved underground to escape high electricity tariffs, said Rajat Ahlawat of regulatory firm Crystal Intelligence.

According to the National Council of Resistance of Iran, around 1,000 legal crypto mining farm licenses were issued in 2020, while this number exceeded 10,000 in 2022. However, according to former President Hassan Rouhani, 85% of mining was unlicensed as of 2021. According to data from state electricity company Tavanir, around 700,000 illegal mining devices operate in the country.

Ahlawat said licensed miners are unable to make significant profits due to high electricity tariffs, so many people are mining illegally in homes, mosques and schools – places with low-cost or free electricity. It is also thought that some organisations affiliated with the Iranian government are also mining in this way.

Illegal mining operations put a serious strain on the country’s power grid, occasionally causing power outages across the country. Tavanir has launched a crackdown by offering rewards to those who report these activities. In 2022, 9,404 illegal mining devices were seized in Tehran alone in six months.

Bitcoin’s hashrate dropped by 27.9% on Sunday after the US bombed Iran’s Fordow nuclear facility, which it built deep in the mountains. The drop fueled speculation on social media that Iran was mining Bitcoin in the mountains. However, some mining firms, such as Blocksbridge Consulting, have disputed this theory, stating that short-term hashrate fluctuations can be misleading.

Ahlawat said there was no definitive evidence of mining taking place there, although he noted that nuclear facilities like Fordow have adequate electrical infrastructure. But if there were, he said, such an operation would be carried out by the Iranian government or its affiliates.

The Iranian Revolutionary Guard Corps (IRGC) stands out as the country’s largest mining force. According to Easton, the IRGC may be the largest Bitcoin miner in Iran. However, the government’s history of hiding its mining activities makes it difficult to obtain accurate data in this area.

As a result, it is not clear how much Bitcoin Iran has made to date. This is mainly because about 85% of mining activities have gone underground, and the government does not report these activities transparently. However, for many Iranians, crypto mining is one of the few ways they can make a living amid high inflation.