Some experts point out that Iran may have mined 200,000 units of Bitcoin since it began fostering the sector.
Since at least 2019, Iran has turned to mining and trading cryptocurrencies out of necessity — a result of severe international sanctions and a local currency that has lost value due to rampant inflation.
However, experts told Decrypt that it is still almost impossible to estimate how much the country holds in digital assets.
The Cambridge Centre for Alternative Finance estimated that Iran was responsible for 7.5% of Bitcoin's hashrate in March 2021 — a number that fell to just 0.12% in January 2022.
Throughout the country's history, Andrew Scott Easton, founder and CEO of the Bitcoin mining fund Masterminded, estimates that Iran has mined approximately 60,000 BTC — which would be worth $6.4 billion at current prices.
Meanwhile, Kent Halliburton, co-founder and CEO of the mining platform Sazmining, estimates that since 2018, the country has mined between 100,000 and 200,000 BTC. This would mean that its reserves could be worth between $10.7 billion and $21.4 billion. The period is relevant since in 2019, Iran began issuing legal permits for cryptocurrency mining.
But Rajat Ahlawat, a researcher at the compliance firm Crystal Intelligence, told Decrypt that it is very complex to make this estimate. This is because the mining industry in Iran has largely been pushed underground as a way to avoid high electricity prices.
The easiest sector to track is that of legally licensed mining farms. In 2020, about 1,000 licenses for mining farms were issued, according to the Iranian National Resistance Council — a coalition opposed to the current Iranian government. The same source stated that in 2022, more than 10,000 licenses were granted to miners and brokers.
However, former president Hassan Rouhani stated that about 85% of mining in Iran was unlicensed in 2021. The state electricity company of the country, Tavanir, estimated that approximately 700,000 illegal mining rigs were operating in Iran at the beginning of this year.
This is because licensed farms often struggle to make a profit, according to Ahlawat, due to the high rates and electricity prices imposed on them.
"Let's take the iron and steel industry — it consumes a lot of electricity for smelting and other activities — but the rates that this industry pays are lower than those paid by the miners [of crypto]," Ahlawat explained to Decrypt, justifying why so much mining occurs clandestinely.
When a new Bitcoin is mined, there is no on-chain record of where the miner was located. This means it is impossible to know its origin, allowing Iranian citizens and the government to escape international sanctions.
As a result, one of the conditions of the cryptocurrency mining license is that any Bitcoin mined must be sold directly to Iran's central bank, so that the government benefits by circumventing sanctions. However, this causes individual miners and groups to lose this benefit of Bitcoin mining.
Therefore, a large part of the mining in Iran comes from individuals and institutions like schools and mosques, which have access to free or heavily subsidized electricity, Ahlawat explained. Not to mention government-linked organizations that also mine Bitcoin and benefit from reduced rates.
These illegal operations put enormous pressure on the Iranian electrical grid, causing blackouts across the country at times, and also reducing potential profits for energy suppliers. The problem has become so severe that Tavanir has started offering rewards for reporting illegal mining farms.
Due to the high demand for electricity from cryptocurrency mining and reports from local media, Ahlawat believes that most operations in Iran are concentrated in large cities. In 2022, for example, Iranian police discovered and confiscated 9,404 illegal crypto mining devices in Tehran over six months.
On Sunday, the United States bombed the Iranian nuclear site of Fordow, which is buried deep within a mountain. From the day before the attack until Tuesday, Bitcoin's hashrate fell by 27.9%, according to BitInfoCharts. This caused a post on X to go viral with speculation that Iran was mining Bitcoin in the mountains.
Ahlawat believes that the nuclear facility would have enough electrical infrastructure to operate a farm, but added that there is no specific evidence suggesting that a mining operation exists in Fordow. Meanwhile, the mining company Blocksbridge Consulting refuted the theory in a newsletter, stating that the industry should not pay so much attention to short-term variations in hashrate, given its daily volatility (Galaxy's research head, Alex Thorn, said the same on X).
Still, Ahlawat stated that if the nuclear facility were actually mining Bitcoin, it would be under orders from the Iranian government or one of its branches.
The Islamic Revolutionary Guard Corps, known as IRGC, is considered a major player in cryptocurrency mining in Iran, according to Easton and Ahlawat. The IRGC is a powerful branch of the Iranian armed forces, created after the 1979 revolution. Easton believes that the IRGC is likely the largest Bitcoin miner in the country, citing an article from the Iranian National Resistance Council.
"Again, we don't have exact numbers," Ahlawat added. "Since the government is involved, Iran has an excellent track record of hiding things, so all mining done by the government is hidden. That's why we have no insight into it."
In summary: it is not precisely known how much Bitcoin Iran has mined. This is because about 85% of the industry would have been pushed underground as a way to avoid high electricity bills and to keep their crypto tokens.
It's easy to judge the Iranian mining industry, but a large part of the country's civilian population is just trying to make some money and escape the national hyperinflation. Decrypt found a social media account selling soundproof boxes for home miners, with 166,000 followers — equivalent to 0.18% of the Iranian population.
The Iranian public is so involved with crypto that last year, authorities in the country warned against the game Hamster Kombat, a 'tap-to-earn' type, on Telegram. Admiral Habibollah Sayyari, deputy chief of the Iranian armed forces, said the game was a distraction created by the 'enemy' to divert attention from national politics, calling it part of the West's 'soft war' against Iran.
Despite the warning, citizens continued to play the click game that promised airdrops of crypto tokens as they progressed in the game. The app attracted over 300 million players, all hoping to get rich with the Telegram miniapp. However, many complained that upon receiving their tokens, they only got 'dust,' due to the extremely low value.
The HMSTR token has already dropped 90% since its all-time high, reached shortly after its launch. If any Iranian kept their HMSTR tokens hoping to protect themselves from the approximately 38% inflation in the country, they ended up failing.