Bitcoin, power cuts and smog worsen Iran’s pandemic woes

Energy-sucking cryptocurrency mining of Bitcoin has been blamed for Iran's electricity shortages

 The logo of Bitcoin digital currency is pictured on the front door of an ATM in Marseille, southern France. AFP

Cities across Iran have been cloaked in thick layers of toxic smog and darkened by blackouts, as the alleged use of low-quality fuel and power-sucking cryptocurrency mining deepen the country’s hardships.

Tehran's Hamshahri newspaper, the country's most-read daily, ran the headline, "20 Days Living in Smoke," on Wednesday over a photo of the capital covered in smog.

Power plants have been forced to switch to burning low-grade fuel oils to generate electricity because high levels of domestic consumption have led to natural-gas shortages, the semi-official Iranian Students’ News Agency reported. Oil Minister Bijan Namdar Zanganeh denied earlier this week that any of Iran’s power stations are using fuel oil to generate electricity.

Other plants have shut down, resulting in power cuts in various cities, including the capital, Tehran. Officials there said last Wednesday that pollution levels had become “dangerous”, ISNA reported.

Gas has become scarce because it’s used to heat most Iranian homes, and temperatures have been especially cold this winter. Household use has also increased as people stay at home to avoid coronavirus infection, while travel in private vehicles has shot up as people shun mass transport.

Household gas consumption was up by 30 per cent in late November from a month earlier, Mohammadreza Joulaei, director of supply at the National Iranian Gas Company told state TV.

The power cuts have been compounded by the mining of Bitcoin and other cryptocurrencies, which uses banks of high-powered computers to verify the legitimacy of transactions and create units of digital coin, government officials have said.

US sanctions that have isolated Iran from global financial institutions have fuelled a surge in cryptocurrency mining in the Islamic Republic, which has some of the cheapest electricity in the world.

The strains on the electricity grid led the government to start cracking down on illegal mining operations, and about 6,000 mining machines were recently confiscated in Markazi province, the managing director of the Markazi Electricity Supply Co., told ISNA.

A spokesman for the country’s electricity industry apologised for the shutdowns on state TV and said power supplies to Bitcoin miners and industry have been strictly limited to meet domestic needs.

The heavy pollution and power shortages are coming at a time when the country is battling Covid-19.

Health officials in the capital have warned that high levels of pollution will exacerbate the effects of the pandemic, which has already caused more deaths in Iran than any other country in the Middle East.

The head of Tehran’s coronavirus task-force urged authorities to enforce a full shutdown of the city for several days to ease high levels of congestion, which he said is directly linked to increased hospitalisation of virus patients, the semi-official Tasnim news agency reported.