Iranian Energy Subsidies for Crypto Mining: How Cheap Power Fuels a National Crisis

Iran produces Bitcoin for as little as $1,300 per coin. Meanwhile, the average Iranian household faces up to 12 hours of blackouts every day. This isn’t a coincidence-it’s policy.

Why Iran Lets Miners Use Cheap Electricity

Iran’s government doesn’t just allow cryptocurrency mining-it actively encourages it. Electricity for licensed miners costs between $0.01 and $0.07 per kilowatt-hour. That’s less than one-tenth of what miners pay in the U.S., and over 200 times cheaper than in Italy, where Bitcoin mining costs $306,000 per coin. The reason? Iran uses crypto mining as a sanctions-busting tool. By selling mined Bitcoin abroad, the government earns hard currency it can’t get through traditional banking.

The Central Bank of Iran bans citizens from using Bitcoin for payments, but it lets licensed miners export their coins to pay for sanctioned imports like medicine, food, and industrial parts. In 2024, around $700 million in cryptocurrency was used this way. That’s not a side effect-it’s the whole point.

The Scale of the Problem

Cryptocurrency mining in Iran uses nearly 2,000 megawatts of electricity. That’s 5% of the country’s total power output. But here’s the catch: it’s not evenly distributed. Mining operations account for 15-20% of Iran’s electricity imbalance, meaning the grid is stretched far beyond its limits. In summer, when air conditioning demand spikes, the grid collapses. Power cuts become routine.

One illegal mining farm, hidden inside the tunnels of Ahvaz Stadium, was found running 24/7. Meanwhile, residents in the same city reported 21 hours of blackouts in a single week. A Reddit poll from June 2025 showed 92% of 1,450 Iranian users blamed crypto mining for the outages. Telegram channels now post real-time blackout maps that line up perfectly with known mining locations. When Bitcoin’s price jumps, blackouts spike within 48 hours.

Who’s Really in Control?

It’s not just random individuals mining Bitcoin. The Islamic Revolutionary Guard Corps (IRGC) controls an estimated 55-65% of all mining operations, either directly or through front companies. These aren’t small setups in garages. They’re industrial-scale farms with thousands of ASIC machines, often located near power plants or military bases.

Energy policy analyst Mohammad Bagher Nobandegani called it “state-sanctioned theft of public resources.” The IRGC gets cheap electricity-subsidized by the state-and turns it into hard currency. Meanwhile, hospitals, schools, and homes pay the price.

Former Energy Minister Reza Ardakanian warned in 2024 that mining was using up to 10% of Iran’s total electricity generation. That’s more than the entire city of Tehran consumes. And the government knew. They just chose to ignore it-for profit.

The Illegal Mining Epidemic

Legal mining is hard to get into. You need permits from three different agencies, a 3-6 month wait, and you still pay $0.04-$0.07/kWh. But if you’re a regular citizen and you plug a few miners into your home outlet, you pay only $0.01-$0.02/kWh. The incentive to cheat is massive.

The government estimates that illegal miners consume up to 2 gigawatts daily-equivalent to the entire power usage of Tehran. In July 2025, a nationwide internet shutdown caused a 2,400 MW drop in electricity demand. That wasn’t due to a blackout. That was because 900,000 illegal mining rigs suddenly went offline.

To fight back, the government launched a reward program: citizens who report illegal mining get 10% of the recovered electricity costs. In the first six months of 2025, 8,432 reports led to 2,157 shutdowns. But for every rig taken down, ten more pop up.

Why the Grid Can’t Handle It

Iran’s power grid was built in the 1970s and 80s. It’s outdated, poorly maintained, and running at 60-70% of the capacity it needs. There’s no room for growth. Every new mining farm adds pressure to a system already on the edge.

Winter is the only season mining runs smoothly. Cold weather means lower household electricity use. But in summer, when demand jumps 30-40%, the government shuts down legal mining operations. The result? A cycle of chaos. Miners wait for winter. Citizens suffer through summer. And the grid gets worse every year.

The International Energy Agency predicts power shortages will grow by 25-30% by 2027 if nothing changes. Iran doesn’t have the money to upgrade its grid. So instead, it doubles down on mining.

The Human Cost

This isn’t just about electricity bills. It’s about survival.

In Tehran, families keep ice packs in freezers to survive 40°C heat during blackouts. Hospitals rely on diesel generators that run out of fuel. Children study by phone flashlight during 10-hour outages. Meanwhile, mining farms in Qom, Mashhad, and Isfahan run on uninterrupted power, cooled by industrial AC units that cost more than a year’s salary for most Iranians.

One mother in Shiraz told Iran Focus: “I can’t charge my baby’s oxygen machine. The power goes out. The miners? They never lose power.”

The Irony of Regulation

Iran’s government created a paradox. It bans Bitcoin for everyday use but relies on it to survive international sanctions. It punishes citizens for using subsidized power to mine-but profits from the same activity when done by the IRGC.

Licensed miners must use state-approved mining pools that take 15-20% of their earnings. They’re forced to install smart meters that report usage in real time. But the IRGC’s operations? No meters. No oversight. No penalties.

Energy Minister Ali Akbar Mehrabian defends the system, saying it brings in $800 million a year in foreign exchange. But Dr. Saeed Laylaz, former economic advisor to President Khatami, called it a “parallel economy”-one where the state controls both the fuel and the output, bypassing every rule meant to protect the public.

What’s Next?

Iran won’t stop mining. It’s too profitable. Too useful. Too embedded in the regime’s survival strategy.

But the grid is breaking. The people are angry. And the world is watching. The next big move might not be a crackdown-it could be a controlled collapse. The government may eventually force miners to move offshore, selling their equipment to Kazakhstan or Russia. Or they may just let the system burn out, blaming “foreign sabotage” for the blackouts.

For now, the choice is clear: Iran chooses Bitcoin over bread. Mining over medicine. Profit over people.

How It Compares: Iran vs. Other Mining Hubs

Bitcoin Mining Cost and Power Usage Comparison (2025)

Country	Cost per Bitcoin	Electricity Cost/kWh	Grid Stability	Government Support
Iran	$1,300	$0.01-$0.08	Very Low	Indirect (sanctions evasion)
Kazakhstan	$5,000	$0.03-$0.06	Moderate	Officially permitted
United States	$8,000-$12,000	$0.07-$0.15	High	Regulated, taxed
Italy	$306,000	$0.25-$0.40	High	Banned
China (pre-2021)	$2,100	$0.04-$0.07	High	State-controlled

Iran’s advantage isn’t technology. It’s not infrastructure. It’s not even efficiency. It’s the willingness to sacrifice its people’s basic needs for a few billion dollars in foreign cash.