Unlicensed Crypto Mining in Iran: How the IRGC Runs a State-Backed Bitcoin Cartel

Imagine living in a city where the power cuts out for hours every day, not because of grid failure, but because half the electricity is being siphoned off to run silent, humming server rooms hidden inside military bases. This is the reality for millions of Iranians today. While the government officially legalized Cryptocurrency Mining is the process of using computer hardware to validate blockchain transactions and earn digital rewards in 2019, the true scale of the industry has been captured by an unlikely player: the Islamic Revolutionary Guard Corps (IRGC). What began as a strategic move to bypass international sanctions has evolved into a massive, unlicensed operation that investigators now call a "crypto cartel." It’s a story of state power, stolen energy, and a two-tiered system where ordinary citizens pay the price for the regime’s financial survival.

The Birth of a State-Run Crypto Empire

To understand how we got here, you have to look at the timeline. By 2019 and 2020, international sanctions were squeezing Iran’s dollar channels dry. The Supreme Leader’s office needed a new way to move money without leaving a paper trail. Enter the IRGC. Reports indicate that Tehran’s most influential power group received direct orders to enter the cryptocurrency sector. They didn’t just dip their toes in; they built infrastructure. A prime example is the 175-megawatt Bitcoin mining farm established in Rafsanjan, Kerman Province. On paper, it looked like a joint venture between an IRGC-affiliated enterprise and foreign investors, likely Chinese partners attracted by rock-bottom electricity prices. In reality, it was a strategic asset for the state, located in special economic zones or military bases where civilian oversight is virtually non-existent.

Scale of Operations: Who Really Owns the Miners?

The numbers are staggering. Current estimates suggest there are approximately 180,000 active mining devices across Iran. Of these, only about 80,000 are in private hands. That leaves a massive gap-potentially up to 100,000 units-under the direct control of state or quasi-state organizations. This isn't just a few rogue officers with spare cash; this is institutionalized extraction. Entities like Astan Quds Razavi is a massive religious foundation and charitable trust under the direct supervision of the Supreme Leader of Iran have formed a de facto monopoly group. These organizations profit by systematically plundering national electricity resources, operating with a semblance of legitimacy while commandeering a vast share of the country's energy grid.

The Energy Crisis Connection

Why does this matter to the average person? Because every kilowatt-hour used by those ASIC miners is one less available for your home or factory. In 2022, the Iranian parliament quietly passed legislation allowing the military to establish private power plants and transmission lines. This legal loophole enabled the IRGC to directly access subsidized electricity and even redirect public power resources intended for cities toward their secret mining farms. The result? Debilitating power outages. Homes and factories experience blackouts for hours or days at a time. Energy Minister Ali Abadi, who is himself a former IRGC commander, acknowledged the crisis by likening unauthorized crypto mining to "putting a hand in others' pockets" and calling it "an ugly and unpleasant theft." Yet, given his background, many question how aggressively the government will crack down on operations run by his former organization.

Sanctions Evasion and Global Reach

Beyond the local energy drain, these mines serve a geopolitical purpose. Cryptocurrency offers two key features that traditional banking lacks: direct, intermediary-free transactions and relative anonymity. Unlike bank transfers that leave clear audit trails, crypto exchanges occur directly between digital wallets. Blockchain analytics firms have identified Iran as one of the world's major Bitcoin producers, largely due to this state-backed effort. Both the U.S. Treasury Department and Israeli intelligence have specifically targeted Bitcoin wallets tied to IRGC operations. These funds are reportedly used to finance proxy groups involved in regional conflicts. It’s a sophisticated method of moving wealth outside the reach of global financial controls.

Regulatory Cat-and-Mouse Game

The regulatory landscape in Iran is confusing, often designed to consolidate control rather than create fair competition. Licensed miners face high energy tariffs and must sell their digital assets directly to the Central Bank of Iran (CBI). This makes mining financially unsustainable for many legitimate operators, pushing them underground or out of business entirely. Meanwhile, the IRGC operates in a gray area. Recent moves by the CBI highlight this tension. On December 27, 2024, the central bank blocked all Iranian cryptocurrency-to-rial payments through domestic websites. But by January 2025, they began selectively unblocking specific trader exchanges using a government API that provides full access to user data. The goal isn't to stop crypto; it's to monitor and control it. Many Iranians circumvent these restrictions using Virtual Private Networks (VPNs) to access foreign exchanges, avoiding local scrutiny and maintaining some degree of financial independence.

What This Means for the Future

The combination of political protection, armed enforcement, and direct access to subsidized electricity ensures that IRGC mining operations remain largely immune to the pressures applied to private miners. As long as sanctions persist, the incentive for the state to maintain this parallel economy remains strong. For ordinary Iranians, the situation means continued energy instability and limited access to the same sanctions-evasion benefits enjoyed by the elite. The "crypto cartel" model shows how state power can distort a decentralized technology, turning a tool of financial freedom into an instrument of state control and resource extraction.

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