The authorities in Kyrgyzstan recently revised their Medium-Term Tariff Policy (MTTP) for electricity and heating, leading to power tariffs in the nation for cryptocurrency mining increase by 12.5%.
The authorities have made such decisions due to the huge energy consumption required in the cryptocurrency mining process. The administration announced the Medium-Term Tariff Policy for Electricity (2021-2025) on September 30 after being proved by the cabinet of ministers.
Kyrgyz government recently updated electricity tariffs involving different groups of consumers based on their needs. The officials listed cryptocurrency mining activities as major power consumers alongside the alcoholic beverage’s manufacturing industry and gold mining.
Surely, the Kyrgyz government seeks to ensure the power sector’s sustainable and stable function with the aforementioned measures.
The authorities will implement a set of the following regulations concerning electricity rates of cryptocurrency mining. Firstly, Kyrgyz authorities have categorized mining firms or cryptocurrency firms as one of the 14 groups put into consideration in the revision scheme.
Cryptocurrency miners will be charged 2.52 Kyrgyzstani som or about $0.03 for each kilowatt-hour of electricity consumed. The authorities will adjust prices every year to reflect the average annual inflation level in the four years during 2021-2015, covered under the new tariff policy.
Lastly, the officials will update the revised tariffs based on the additional operating costs of the country’s thermal power plants and distribution costs.
The revised tariff comes into effect after Kyrgyzstan’s Ministry of Economics announced the need to impose a 15% tax on the cost of electricity consumed to mine cryptocurrencies in August 2020.
Kyrgyz Attracting Miners
After China banned cryptocurrency mining earlier this year, Kyrgyzstan has become one of the hotspots for the mining pools.
Since Kyrgyzstan is an attractive mining destination, cryptocurrency mining has become one of the causes of the energy crisis in the region.
The latest statistics by the World Bank shows that the population’s access to electricity in the country had fallen in 2019 when compared to 2017 and 2018. The consumption of energy per year for Kyrgyzstan is around 10.52 bn kWh.
As a result, Kyrgyzstan is making efforts to regulate the cryptocurrency sector. Last year, the National Bank of the Kyrgyz Republic introduced licensing requirements for crypto exchanges to protect local investors.
In August, Kyrgyzstan’s State Service for Regulation and Supervision of Financial Markets introduced a new regulatory framework to give legal status to crypt exchange. Authorities have also put forward a draft proposal seeking to regulate cryptocurrency exchanges so that to comply with existing ALC (anti-money laundering compliance) /CFT (combating the financing of terrorism) measures. The new framework is also speculated that will generate new income sources for the nation’s national budget.
El Salvador’s President Nayib Bukele shared a video showing the apparent progress of the country’s Bitcoin (BTC) mining plant powered by volcanic geothermal energy.
The video shows an overview of a power generation facility with technicians enabling crypto mining rigs.
— Nayib Bukele (@nayibbukele) September 28, 2021
Bukele did not elaborate much on the process shown on the video, only writing “first steps” with a Bitcoin tag alongside emojis depicting a volcano and El Salvador’s national flag. The president’s office did not immediately respond to Cointelegraph’s request for comment.
The post comes months after Bukele announced plans to build a geothermal Bitcoin mining facility. The president said in June that he would be instructing state-owned electrical company LaGeo to manage a Bitcoin mining plant powered with “very cheap, 100% clean, 100% renewable, 0 emissions energy.”
El Salvador officially accepted Bitcoin as legal tender alongside U.S. dollars on Sept. 7, just three months after the nation’s Legislative Assembly passed the “Bitcoin Law.”
Related:Bitcoin’s power consumption this year has already surpassed all of 2020’s
The latest move by the Salvadoran government reaffirms the massive potential for Bitcoin proponents to cut BTC carbon footprint using a wide number of renewable energy sources, including hydroelectric, solar and wind power.
According to Tesla CEO Elon Musk, Bitcoin already hit its benchmark on renewable energy in July, suggesting that the percentage of renewable energy usage was “likely at or above 50%.
Missouri’s largest utility, with 1.2 million customers, is mining bitcoin to better match demand and manage variability on the grid.
Ameren Missouri, the largest utility in the state that serves 1.2 million customers, began experimenting with bitcoin mining in April to manage variability on the grid, reported E&E News. The company plugs the bitcoin mining rigs when electricity is cheap and demand is low as an alternative to ramping up its power plants up and down to match demand.
“We have pretty dramatic changes in load minute by minute, second by second at times,” said Warren Wood, the utility’s vice president of regulatory and legislative affairs, per the report. “We need something that’s really got quick, ramping up and down capability to be a really effective tool for grid balancing.”
The pilot, which is being funded entirely by utility shareholders at no cost to Missouri ratepayers, sparked the interest of Missouri’s most prominent energy regulator, Ryan Silvey, the Public Service Commission chair. Silvey, a former Republican state senator, told E&E he is personally drawn to bitcoin and was interested in assembling a technical workshop on bitcoin mining even before hearing about the Ameren initiative. He believes Bitcoin has potential as a grid asset.
“When a company brings us a program that has very little or no risk to the consumer that will benefit them, I think it’s exciting,” Silvey said. The former senator also recommended that Amaren consider shouldering any risk of the project, although state legislation allows utility companies to “run pilot programs and look at alternate sources of revenue that could be used to lower rates,” according to the report.
Joshua Rhodes, a research associate at the Webber Energy Group at the University of Texas at Austin, researched the impact of bitcoin mining on the southern state. He observed that bitcoin miners “can add a lot of value, particularly how fast they can move up and down…faster than some traditional generators can move, which is value.” Wood reiterated how quick miners could be online at Ameren.
“We’re talking a minute or less to be on or off,” Wood said. “You really have a good mechanism for trying to seek that better balance of the grid between your generation resources and load.”
In July, the Mechanicville plant, an old hydro-power station in upstate New York and one of the oldest plants in the U.S., shared how they could also increase efficiency and profitability with bitcoin mining.
A new study from the New York Digital Investment Group (NYDIG) has projected that Bitcoin’s energy consumption will remain below 0.5% of the global total over the next decade.
NYDIG published its ‘Bitcoin Net Zero’ research paper this month, finding that Bitcoin’s energy consumption and carbon emissions will not skyrocket in the coming years, even if prices do.
The study, which was penned by Castle Island Ventures partner Nic Carter and NYDIG founder Ross Stevens, discusses how the network’s carbon emission may change in the future depending on fluctuations in Bitcoin’s price, mining difficulty, and energy consumption.
The study’s most aggressive outlook found that Bitcoin’s emission would still represent a tiny fractions of the global total even if the price of BTC went through the roof by the year 2030, concluding:
“Even in our most aggressive, high price, scenario, in which Bitcoin reaches $10 trillion by 2030, its emissions amount to only 0.9 percent of the world’s total, and its energy outlay is just 0.4 percent of the global total.”
The report projects the future growth of Bitcoin mining based on data from 2020. The researchers calculated the historical electricity consumption of Bitcoin miners as a function of the network hashrate and machine efficiency.
For the year 2020, the authors found that Bitcoin consumed 62 terawatt-hours (TWh) of electricity and produced 33 million tonnes of carbon dioxide emissions to represent just 0.04% of global energy consumption and 0.1% of global carbon emissions.
The authors asserted the carbon waste associated with Bitcoin mining was “insignificant in global terms” during 2020.
Related:Bitcoin’s power consumption this year has already surpassed all of 2020’s
Currently, BTC mining uses 101 TWh per year, or 0.45% of global electricity. According to Cambridge University, the Bitcoin network consumes more energy than the entire country of the Philippines.
However, the university also found that Bitcoin consumes less electricity total than all the refrigerators in the U.S. combined, and only 4.6% of the total energy used for residential air-conditioning worldwide.
NYDIG published today “Bitcoin Net Zero,” a 70-page document that evaluated Bitcoin’s energy consumption in the context of its role in society. The paper, co-authored by Nic Carter, general partner of Castle Island Ventures, and Ross Stevens, founder and executive chairman of NYDIG, delved into the breakthrough technology’s nuances. It dealt with the benefits Bitcoin brings to society, why energy is a requirement and compared Bitcoin to similar innovations that also improve citizens’ quality of life around the world. Here you will find a summary of the main points.
The authors shared what Bitcoin’s current energy used is like and how it may look in the future. Additionally, the report explained the role energy plays in human flourishing, what correlation there is between energy consumption and human development, as well as showing how the world’s energy grid will evolve in the next few decades.
“We estimate that Bitcoin consumed 62 TWh of electricity in 2020, which resulted in 33 million tonnes of carbon dioxide emissions, insignificant in global terms, representing just 0.04 percent of global primary energy consumption and 0.1 percent of global carbon emissions,” the report said. “Bitcoin’s electricity consumption is also low compared to other energy-intensive modern conveniences, such as domestic refrigeration (630 TWh) and domestic tumble dryers (108 TWh).”
The report analyzed Bitcoin’s current energy expenditure and projected how it could evolve in this decade based on the likely price appreciation of bitcoin. NYDIG and Nic Carter explained that the price of one BTC in U.S. dollars is significant for energy consumption because it is directly correlated with miners’ willingness to invest more into equipment and machinery. The premise is, the higher the bitcoin price, the more energy miners are incentivized to expend in their activities; because the bigger the expenditure of energy, the more likely they are to mine a block and receive a reward in bitcoin.
Considering the price of Bitcoin would reach only $60,000 by 2030, the report estimated electricity consumption and associated emissions would peak at around 120 terawatts hours (TWh) and 47 metric tons of carbon dioxide (MtCO2) in 2024, “before declining rapidly.” It is estimated that emissions would fall below a net-zero pathway by 2028 — a line reduction in carbon emissions from 2020 levels to zero by 2050.
In a more optimistic scenario, in which Bitcoin would climb over 45 times its average 2020 price to reach $490,000 by 2030, its electricity consumption would peak in 2027 at 11 times its 2020 level, and carbon emissions would be seven times higher than their 2020 level. The report then estimated that emissions would fall rapidly after 2027, reaching 22 MtCO2 by 2040. “Even at the peak of the high price scenario, Bitcoin’s emissions only account for 0.9 percent of global carbon emissions.”
Regardless of energy consumption, however, NYDIG and Nic Carter advocate that the value Bitcoin can provide to billions of people worldwide by “providing a sound new monetary system, independent of government…far outweighs its associated energy requirements.” Additionally, the report highlights how bitcoin miners are increasingly focusing on reducing their carbon emissions, seeking renewable energy, and using otherwise wasted energy such as curtailed hydropower and flared gas. “Over the longer term, the intensity of Bitcoin’s carbon emissions (and with it Bitcoin’s absolute carbon emissions) will decline, as the development of renewables continues and countries strive to decarbonize their electricity grids.”
The Significance Of Bitcoin To Society Today
The primary value provided by Bitcoin today relates to shielding people from the harms caused by monetary instability and currency collapse — something far more common than what would be believed at first. Recent examples include Argentina in 2001, Turkey in 2018, Lebanon in 2019, and Cuba and Nigeria in 2021, all of which disproportionately affected the middle and lower classes, who usually do not have the means to be sovereign over their assets and move them abroad when needed.
“The destruction of a nation’s savings through uncontrolled hyperinflation is a modern phenomenon. Of course, hyperinflation is not the only form of monetary collapse. Monetary policy, if misused, can be a powerful tool for confiscation, effectively enabling an unconsented redistribution of societal resources,” the report said. “All too often, monetary reforms take citizens by surprise and strip them of their purchasing power. Because citizens tend to save either directly or indirectly through instruments tied to government debt and the currency, sharp changes in monetary direction often come at the expense of savers.”
While people’s savings have for the past century been susceptible to the indirect effects of central bank monetary policies, today, they have more democratic access to sound money outside of the influence of central banks. Bitcoin brings economic sovereignty to anyone that adopts it, shielding regular folks from the whims of regulators and monetary policies’ chiefs worldwide. Central banks benefit insiders only, while Bitcoin helps everyone.
Along those lines, the report asserts that Bitcoin’s energy consumption must be seen in the context of its merits. Technologies with an elevated energy cost and carbon footprint have nonetheless been adopted by society because they increase the quality of life. The same way one wouldn’t enjoy winter without a heater in their home, millions worldwide wouldn’t like living without Bitcoin and having to resort to government-influenced assets.
“Aside from being a means to transport wealth through time and space via a system with predictable rules and sound assurances based on cryptography, Bitcoin also facilitates the final settlement of value with no counterparty risk. Bitcoin settles billions of dollars’ worth of transactions every day without meaningful interruption or downtime, granting users predictable, strong finality within a few blocks,” the report said.
Final settlement of value with no counterparty risk and no downtime is possible because of Bitcoin’s proof of work (PoW) system, a setting with no coordinator or leader. “Alternative systems that appear less costly are based on centralized models with a handful of ultimate arbiters who determine the valid transactional history,” the report explained. “It is because Bitcoin strives to establish a neutral, apolitical, and unopinionated transactional medium that it must retain an open setting, in which any miner can leave and join at their pleasure. Proof of work permits this.”
Consequently, mainstream media’s far too common reports on Bitcoin energy consumption that dismiss the inherent benefits the technology provides to millions around the world and why it is necessary are not only short-sighted but cannot be taken seriously. More often than not, such reports also carry a heavy financial privilege bias.
Energy Consumption And Civilizational Progress
Historically, humanity’s relationship with energy has been one of capturing and exploring it to enable societal flourishing, poverty reduction, and improved quality of life worldwide. Industrial processes, electrification, industrialized agriculture, and mechanized transportation have been central to the growth of humanity and enabled continuous developments, ultimately allowing more outstanding inventions and enhancements to life on Earth.
“Equipping citizens with abundant energy is essential to attaining a high standard of living. Indeed, because abundant energy grants us so many luxuries, society rarely engages in public debate about the social merit of these technologies,” NYDIG said. “The social contract that has been sketched out in the West holds that households and industries freely consume energy that they have paid for, while policymakers regulate the grid and mitigate its externalities.”
The electricity grid has shifted towards more environmentally conscious sources lately, which is likely to continue. The progress of civilization will lead to discovering new and better means of producing energy in a sustainable manner.
“Just as gasoline and combustion engines made car travel possible, and efficient batteries enabled personal computation and constant communication, new means of energy production and storage will continue to move civilization forward,” the report said. “Our challenge is to meet society’s ever-increasing demand for energy in a manner consistent with any relevant planetary constraints. The alternatives – regressing to a pre-industrial state or barring the global south from industrializing – are not practical or moral.”
Energy needs to be seen as for what it is, a vital and central aspect of human development and flourishing. The progress of society depends on energy, especially in the interconnected world of today. The key is to work for enhancing the power grid and investing in seeking solutions that enable such flourishing to occur without compromising the planet’s future conditions.
“Bitcoin…offers savers the chance to control their wealth directly in a sound, non-state monetary system, bound by nondiscretionary rules,” the report asserted. “Like all breakthrough technologies, the full impact of Bitcoin’s merits and capabilities has not been immediately appreciated by its entire addressable market, though it is following a rapid adoption curve. Because Bitcoin offers a unique monetary medium with a clearly established value proposition, it can be situated among other energy-intensive innovations that improve the quality of our lives.”
Bitcoin’s Energy Consumption
The report estimated, using a bottom-up approach based on network hashrate and machine efficiency, that Bitcoin mining consumed 62 TWh of electricity in 2020 — an energy-intensive activity by design to provide security to the network and enable its value proposition. NYDIG explained that carbon emissions, on the other hand, are primarily driven by the carbon intensity of miners’ electricity mix and their energy consumption. The report estimated that the industry led to total emissions of 33 million MtCO2 in 2020.
However, NYDIG found that Bitcoin’s energy consumption and carbon emissions are not significant globally, even though the technology has a unique value proposition and the clear potential to improve the quality of life worldwide. The report crunched the numbers to find that, in 2020, Bitcoin represented only 0.04 percent of global primary energy consumption, 0,2 percent of global electricity generation, and 0.1 percent of global carbon emissions.
“Bitcoin’s absolute carbon emissions are low compared both to other innovations that are energy intensive, such as aviation transport and air conditioning, and to major mined products,” the report concluded.
Compare that with the asymmetric benefits Bitcoin has been providing for populations in developing countries, and it becomes clear how uninformed and unfair mainstream media’s remarks on Bitcoin energy consumption are. Furthermore, the future trend for increased usage of renewable energy worldwide will also positively affect Bitcoin.
“Renewables are expected to grow rapidly in the future, as their costs continue to decline, and environmental concerns persist. This trend may ultimately lead to the decarbonization of electricity grids,” the report said. “Further growth in renewables would be required to achieve a ‘net-zero’ world, in which there is a balance between the amount of carbon dioxide emitted and the amount removed from the atmosphere.”
However, given the seasonality of renewable energy sources, fossil fuels are likely to keep playing an important role to ensure that the supply of electricity can meet demand. Wind, for instance, relies on the wind blowing, similar to how solar requires the sun to shine. For those reasons, at times when the wind does not blow or the sun does not shine, fossil fuels will be needed to fulfill demand.
Bitcoin’s energy usage and the associated carbon emissions aren’t an outlier in the grand scheme of electricity grids worldwide, but a product of them instead. Therefore, Bitcoin’s future energy consumption and carbon footprint are set to be positively impacted by the overall trend of increasing renewable energy sources and reducing fossil fuels.
“Bitcoin’s future carbon emissions have been estimated using values for the future carbon intensity of grids and a baseline geographic distribution of hashrate. In all price scenarios, Bitcoin’s carbon emissions increase and peak within the next decade, before declining substantially due to grid decarbonization,” the report said. “Bitcoin’s carbon emissions will always be a small proportion of global emissions. Even at the peak of the high price scenario, Bitcoin’s emissions will only account for 0.9 percent of global carbon emissions.”
Bitcoin’s Benefits As An Innovative Technology Far Outweigh Its Energy Requirements
The positive set of changes Bitcoin has the potential to provide the world population with is greatly underestimated. The distributed digital monetary system can improve the quality of life for all human beings on the planet, empowering people worldwide to regain control of their finances and save in government-agnostic sound money.
However, since not many people understand such potential, mainstream narratives mainly dismiss the upsides while framing natural necessities such as energy consumption negatively. Bitcoin is another breakthrough invention that can enhance society and help it move forward, and its energy consumption is a natural side-effect. Nonetheless, when compared with similar life-enhancing technologies, Bitcoin’s energy costs are negligible and its carbon footprint is but a small fraction of the total emissions in the world.
“Overall, the prospects for the decarbonization of Bitcoin mining over the coming decades are quite promising,” the report said. “Meanwhile, against a backdrop of increasing financial surveillance and global monetary instability, the case for Bitcoin as a monetary safe haven and neutral settlement network grows ever stronger.”
Even when probable upsides and downsides of Bitcoin are accounted for, the technology’s asymmetric potential is unique; a once-in-a-generation opportunity to fix the money and fix the world.
Last week, Cointelegraph reported the seizure of 3,800 PlayStation consoles allegedly being used to mine cryptocurrency. The confiscated gaming units were among a stash of hardware discovered by Ukrainian authorities during a raid on a farmhouse accused of tampering with electric meters to steal power from the local grid.
Based on the initial reports at the time, the PS4 consoles, graphics cards, processing units, and other hardware found at the scene was being used for illegal crypto mining operations.
However, according to an investigation by Ukrainian business publication Delo, the seized PlayStation consoles were being used to generate cards and coins for FIFA Ultimate Team (FUT), a game mode in the popular FIFA football game title.
Players usually have to earn FUT coins and cards by winning football matches on the game but the busted warehouse was allegedly generating black market variants of these in-game items. According to Delo, Ukraine’s Secret Service is yet to confirm or deny its findings with the agency electing to keep details of the ongoing investigation under wraps.
Related:Ukrainian police seize 3,800 PS4 consoles used for illegal crypto mining
Cointelegraph’s initial report did cast doubts on the likelihood of the illegal operation being used for crypto mining stating:
“PlayStation 4 is not the ideal rig to mine cryptocurrency. Given its slightly outdated configuration compared to many mining rigs available today, even a 16-console PS4 setup would fail to generate meaningful returns with legal electricity usage.”
However, using gaming hardware to mine cryptocurrencies is not unheard of and has in fact been linked with graphics processing unit (GPU) shortages for non-crypto mining users. Increasing demand for GPUs from miners coupled with a global semiconductor shortage saw budget PC gamers unable to secure next-generation graphics cards for their hardware.
A major cryptocurrency and blockchain association in Russia is launching a project to bring global crypto mining operations to the country amid a Chinese crypto mining crackdown.
The Russian Association of Cryptoeconomics, Artificial Intelligence and Blockchain, or RACIB, announced an initiative aimed at transferring global computing resources for crypto mining to the Russian Federation. More information on the project is expected to be released at a later date, a spokesperson for RACIB told Cointelegraph.
In order to promote and implement the project, RACIB is closely cooperating with Russian government authorities and state corporations, forming a range of joint working groups with local state structures, the announcement notes.
One such group is focused on an “eco-mining” project for building mining farms and data centers powered by renewable electricity sources. In addition to Russia’s rich hydro- and nuclear-based energy, the group is seeking to establish crypto mining operations based on green energy sources like wind-based power plants.
As part of the project, RACIB is already collaborating with some foreign partners including a consortium of some of the largest crypto mining-related companies in China. The announcement notes that companies in the consortium control “more than 25% of the global hashrate of the main cryptocurrencies.”
According to energy-focused publication NS Energy, Russia is the fourth-largest country in terms of electricity production, generating over 1,100 terawatt-hours of energy per year, following China, the United States, and India. According to the announcement, over the couse of 2021 Russia has set up over 1,100 megawatts of new power plants using wind farms in areas like the Rostov region, the Republic of Kalmykia, Adygea, and Stavropol Krai.
Related:The9 signs green Bitcoin mining deal with Russian firm BitRiver
The new initiative brings another strategic opportunity for global crypto miners amid Chinese mining firms fleeing the country as local authorities have been continuously cracking down on crypto mining activity and halting key mining farms . According to data from the Cambridge Centre for Alternative Finance, China’s Bitcoin hash rate already plummeted before the crackdown, dropping to 46% in April 2021 from 75.5% in September 2019. In the same period, the U.S. hash rate share surged to nearly 17% from 4%, while Russia and Kazakhstan’s hash rate rose to about 8%.
Russia is not the only country that is offering Chinese miners its energy capacity to emerge as a major player in the industry. Miami mayor Francis Suarez in June publicly invited Chinese crypto mining companies to consider establishing data centers in the city amid miner capitulation in China.
The Chinese government continues cracking down on the cryptocurrency mining industry by suspending crypto mining operations in another province.
Authorities at Anhui, a small province in eastern China, have announced a set of measures to tackle growing electricity demand and an associated power supply shortage in the next three years, local news agency Hefei Online reported on Wednesday.
As part of Anhui’s efforts to curb energy consumption, the province plans to shut down crypto mining projects and scrutinize new initiatives that require large amounts of energy consumption. Local authorities also plan to adopt new practices for building data centers as well as promote the reform of electricity prices in order to optimize energy usage in the province.
Related:Chinese hydropower plants on sale as crypto miners move abroad
The Anhui province of China is known for once being one of China’s poorest provinces, having only been removed from the country’s official list of impoverished areas in 2020. Anhui is the eighth largest province in the country by population. The province’s power grid reportedly comprises mostly coal-based power plants in addition to several hydropower facilities as well as wind- and solar-based plants.
The news comes amid a major regulatory crackdown on crypto mining in China, following a series of similar bans in other Chinese provinces including Yunnan and Sichuan, one of the country’s biggest hydropower-based mining hubs. Authorities in Xinjiang, Inner Mongolia and Qinghai also ordered mining operations to shutter in recent months.
Bitcoin’s total estimated annual electricity consumption has plummeted nearly 60%, falling from the all-time peak above 143 terawatt-hours (TWh) in May to as low as 62 TWh in early July, according to data from Cambridge Bitcoin Electricity Consumption Index (CBECI). This is the lowest energy consumption rate recorded since early November 2020.
At the time of writing, Bitcoin’s annualized electricity consumption is estimated at 67 TWh, while the upper bound consumption, or the absolute maximum total electricity expenditure based on the worst case assumption, stands at 162 TWh, down from 520 TWh in mid-May.
The lower bound estimate, which corresponds to the absolute minimum total electricity expenditure based on the best case assumption that all miners always use the most energy-efficient equipment available on the market, has also dropped from 47 TWh to 24 TWh.
Despite global regulators continuing to blame Bitcoin (BTC) for excessive energy consumption and associated environmental catastrophe, Bitcoin’s energy consumption has in fact massively dropped recently, according to some data.
Related:Bitcoin Mining Council survey estimates a 56% sustainable power mix in Q2
As previously reported, Bitcoin’s parabolic bull action leading its price above $64,000 in April had driven a massive growth in the amount of electricity consumed by Bitcoin miners, spurring major debates over possible environmental impact of the cryptocurrency. Bitcoin later experienced a major sell-off after Tesla CEO Elon Musk suspended Bitcoin payments for Tesla vehicle purchases on May 12.
In line with Bitcoin prices, Bitcoin’s estimated electricity consumption has been rapidly falling since the announcement, prompted further by China’s crackdown on the cryptocurrency mining industry. After closing down crypto mining facilities in Inner Mongolia this April, Chinese authorities enforced a series of crypto mining bans in major crypto mining hubs including hydropower-based provinces like Sichuan and Yunnan, as well as Xinjiang and Qinghai.
Iran’s challenge with the ever-increasing electricity consumption reached new heights, leading the country to halt electricity exports.
Abuzer Salihi, general manager of Iran’s electricity distribution company Tevanir, announced on state television that it has reduced electricity exports to zero “so that there is no problem in electricity supply in the country.” He said that the electricity supply to Afghanistan’s Herat province, which imported 70% of its electricity from Iran, completely stopped in order to meet domestic needs.
According to the numbers shared by Tevanir, the daily electricity deman reached over 65,000 megawatts while production is around 54,000 megawatts. Aside from the summer heat, Bitcoin (BTC) and crypto mining activities in the country — known for its significant electricity subsidies for local industry — are listed as one cause of the high power demand.
Iran made crypto mining legal in 2019 to license and regulate miners within the country. But the country also saw a spike in unlicensed mining activities, with many unlicensed miners using the resideelectric grid to power up energy-consuming mining rigs.
Iran’s first measure this year was to fine crypto miners using household energy.
A ban on mining until the hot summer months pass followed. Announced by President Hassan Rouhani in May, the crypto mining ban will last until September to ensure access to electricity for domestic consumption. Rouhani also claimed that 85% of the mining activity in Iran is unlicensed.
Related: Proposed bill in Iran could ban all foreign-mined cryptocurrencies
As a last resort before halting electricity exports, the country also called on all legally operating crypto miners to stop their activities. Eshaq Jahangiri, the first vice president of Iran under Hassan Rouhani, made the announcement during a meeting with officials of the Ministry of Energy. “We will ensure that the electricity will not be cut off in essential and important places,” he said.
Meanwhile, Iran continues its crackdown on illegal mining activities. Last month, authorities confiscated more than 7,000 mining rigs at a farm operating in the capital of Tehran