How Iranian Energy Subsidies Fuel Crypto Mining Despite Power Blackouts

Iran produces Bitcoin for as little as $1,300 a coin. In the U.S., it costs over $10,000. In Germany, it’s $18,000. In Italy, it’s $306,000. The reason? Iranian energy subsidies. The government pays for nearly all of it-while millions of Iranians sit in the dark.

It’s not a glitch. It’s policy. Since 2018, Iran has allowed cryptocurrency mining to operate under a system of artificially low electricity prices. For licensed miners, power costs between $0.01 and $0.07 per kilowatt-hour. For regular households? Sometimes even less. But when summer hits and air conditioning demand spikes, the grid collapses. And the lights go out-for schools, hospitals, homes-not mines.

Why Iran Lets Miners Use Its Power for Free

Iran doesn’t subsidize crypto mining because it loves Bitcoin. It does it because it needs foreign cash. Sanctions have cut off Iran’s access to global banking. So the government turned to mining as a way to earn dollars without touching the financial system.

Here’s how it works: Licensed miners buy equipment, plug into the grid, and mine Bitcoin or other coins. They don’t sell them inside Iran-CBI bans domestic crypto payments. Instead, they export the coins and get paid in foreign currency, usually dollars or euros. That money goes straight to state-approved trade channels, helping Iran import food, medicine, and parts for its military and energy infrastructure.

According to AInvest’s 2025 report, this system generates $1.5 billion a year. That’s 0.8% of Iran’s entire GDP. The government claims it’s a lifeline. Critics call it theft.

The Real Cost: 5% of Iran’s Electricity, 20% of Its Grid Imbalance

Crypto mining in Iran uses about 2,000 megawatts of electricity. That’s 5% of the country’s total power output. But here’s the twist: Iran’s grid is already broken. Decades of underinvestment, aging transformers, and corruption have left infrastructure running at 60-70% capacity.

When mining demand surges, the grid can’t handle it. During peak summer months, electricity use jumps 30-40% because of air conditioning. Miners keep running. Homes don’t. In July 2025, a nationwide internet blackout shut down over 900,000 illegal mining rigs-and power consumption dropped by 2,400 MW overnight. That’s more than the entire output of Tehran’s power plants.

One mining operation in the tunnels beneath Ahvaz Stadium was found to be using enough electricity to power 150,000 homes. It was running 24/7 while the city suffered 21-hour blackouts. A Twitter user wrote: “This is economic terrorism against ordinary Iranians.” The post got 42,000 likes.

Legal vs Illegal: Who Gets the Power?

There’s a legal side to mining in Iran-and a massive illegal one.

To mine legally, you need four permits: one from the Ministry of Industry for importing equipment, one from the power company for electricity quotas, one from the Central Bank for exporting coins, and a final license from the Iran Blockchain Council. The process takes 3-6 months. Approval rates? Below 40%.

Meanwhile, illegal miners-estimated at 450,000 to 600,000 people-run rigs in garages, basements, warehouses, and even shopping malls. They use household electricity, which costs $0.01-$0.02 per kWh. That’s 10 times cheaper than what legal miners pay. The government estimates illegal operations consume up to 2 gigawatts daily-the same as Tehran’s entire population.

The Islamic Revolutionary Guard Corps (IRGC) controls an estimated 55-65% of all mining, legal and illegal. According to energy analyst Mohammad Bagher Nobandegani, this isn’t just profit-it’s state-sanctioned theft. The IRGC doesn’t pay taxes. It doesn’t report income. It just takes the power and sells the coins.

Why Miners Stay Despite the Risks

Even with periodic crackdowns, mining keeps growing. Why?

• Profit margins are insane. At $1,300 per Bitcoin and a market price of $35,000, miners make 25x their cost.
• Equipment is cheaper than you think. Used ASIC miners from China arrive via Turkey and Iraq, often smuggled in containers labeled “industrial parts.”
• The government turns a blind eye-until it doesn’t. During winter, when demand is low, mining is encouraged. In summer, when demand spikes, the government shuts down legal operations for weeks. Illegal ones? They keep running.

There’s even a reward system: citizens can report illegal mines and get 10% of the recovered electricity costs. In the first half of 2025, 8,432 reports led to 2,157 shutdowns. But for every rig taken down, three more pop up.

What’s Next? More Blackouts, More Control

In early 2025, Iran started requiring all mining operations to install smart meters. These devices track usage in real time and can be remotely shut off. The goal? To stop household theft and force miners into industrial zones.

But the grid still can’t handle it. The International Energy Agency warns that without major upgrades, power shortages could increase by 25-30% by 2027. The Carnegie Endowment calls this “a microcosm of Iran’s broader energy crisis”-short-term cash wins over long-term survival.

Meanwhile, miners adapt. Some move to solar-powered farms in the desert. Others use backup diesel generators, burning fuel that costs more than the electricity they’re stealing. A few even rent space in abandoned factories, paying bribes to local officials to ignore the noise and heat.

Iran’s government doesn’t want to end crypto mining. It just wants to control it. To tax it. To use it as a sanctions-busting tool. But the cost isn’t just measured in kilowatt-hours. It’s measured in the number of children studying by flashlight, the number of refrigerators full of medicine that spoil, the number of families who can’t afford to turn on their fans.

Global Comparison: Why Iran Is the Worst Place to Live-and the Best to Mine

Compare Iran to Kazakhstan, its regional rival. Kazakhstan charges $0.05-$0.08 per kWh. Miners there pay $5,000 per Bitcoin. Still cheap. But Kazakhstan has a stable grid, no blackouts, and no political crackdowns.

Iran wins on price. It loses on reliability. And it loses on morality.

While miners in Texas or Norway pay for their power and pay taxes, Iranian miners use public resources to generate private wealth-for themselves and the regime. The money doesn’t go to schools. It doesn’t go to hospitals. It goes to arms dealers and sanctioned importers.

There’s no moral high ground here. Just a brutal calculation: $1.5 billion in foreign currency versus millions of people without power.

Iran’s crypto mining story isn’t about technology. It’s about power-who has it, who controls it, and who pays the price. The world watches as a nation trades its people’s basic needs for digital cash. And the lights keep going out.