How Iranian Energy Subsidies Fuel Crypto Mining and Cause Power Blackouts

Iran gives its citizens some of the cheapest electricity in the world-so cheap that mining Bitcoin costs less than $1,300 per coin. Meanwhile, global prices hover around $35,000. That’s not a business opportunity. It’s a national crisis disguised as economic policy.

The Hidden Cost of Cheap Power

Iran’s government subsidizes electricity at $0.01 to $0.05 per kilowatt-hour for industrial users, including licensed crypto miners. For comparison, the average U.S. household pays around $0.15 per kWh. In Italy, mining one Bitcoin costs over $300,000. In Iran, it’s cheaper than buying a used car.

But here’s the catch: every Bitcoin mined uses more than 300 megawatt-hours of electricity. That’s the same amount of power 35,000 Iranian households use in a single day. And Iran has thousands of these machines running nonstop.

According to Iran’s power grid operator Tavanir, crypto mining now consumes nearly 2,000 megawatts of electricity-about 5% of the country’s total power output. But because the grid is old, poorly maintained, and already running at 60-70% capacity, that 5% causes 15-20% of the country’s power imbalance. In plain terms: the system is collapsing under the weight of mining.

Blackouts for the People, Power for the Miners

In the summer of 2025, Tehran residents faced 12-hour daily blackouts. Air conditioners shut off. Refrigerators went warm. Hospitals ran on generators. Meanwhile, mining farms in Ahvaz, Qom, and Mashhad kept running-some hidden inside stadium tunnels, others disguised as industrial warehouses.

A Twitter user with 52,000 followers posted: “21 hours of blackouts this week while the IRGC’s mining farms in Ahvaz Stadium tunnels run 24/7-this is economic terrorism against ordinary Iranians.” The post went viral. It wasn’t an outlier. On Reddit’s r/Iran, 92% of 1,450 comments blamed crypto mining for the outages. Telegram channels like ‘Iran Electricity Crisis’ now post real-time blackout maps that line up perfectly with known mining locations.

When a major internet outage hit in mid-2025, power demand dropped by 2,400 MW overnight. That’s not because people stopped using appliances. It’s because over 900,000 illegal mining rigs were suddenly offline. The scale was undeniable. The Iranian Energy Ministry estimates illegal miners alone use two gigawatts daily-equal to the entire power consumption of Tehran’s 9 million people.

Who’s Really Profiting?

The government says it’s controlling the chaos. Licensed miners must register with the Ministry of Industry, get electricity quotas from Tavanir, and receive approval from the Central Bank of Iran (CBI) to export mined coins. The process takes 3 to 6 months. Approval rates? Below 40%.

But here’s the twist: licensed miners still pay only $0.04 to $0.07 per kWh. That’s still 10 times cheaper than in Kazakhstan, Iran’s main regional competitor. And the CBI allows these miners to sell their Bitcoin for foreign currency-used to buy sanctioned goods like medicine, food, and industrial parts.

The real beneficiaries? The Islamic Revolutionary Guard Corps (IRGC). Independent analysts estimate the IRGC controls 55-65% of all mining operations-either directly or through shell companies. They don’t pay taxes. They don’t report profits. They bypass the central bank entirely. One energy policy analyst at Sharif University called it “state-sanctioned theft of public resources.”

In 2025, the sector generated $1.5 billion in revenue. Of that, $800 million came from licensed miners exporting Bitcoin. The rest? Illegally mined coins funneled into black-market trade, mostly controlled by the IRGC. That’s $400-500 million in unaccounted cash flowing through shadow networks.

The Government’s Dilemma

Iran’s energy minister, Ali Akbar Mehrabian, defends the policy: “Regulated mining brings in $800 million in foreign exchange. It offsets the energy cost.”

But former energy minister Reza Ardakanian warned in 2024 that crypto mining was using up to 10% of Iran’s total electricity generation. Dr. Saeed Laylaz, economic advisor to former President Khatami, put it bluntly: “The government has created a parallel economy where the IRGC controls both the energy supply and the cryptocurrency output.”

The truth? Iran can’t afford to shut it down. The country is under crippling sanctions. Bitcoin mining is one of the few ways to earn hard currency without selling oil. But it’s also burning through the country’s last remaining energy reserves.

How the System Works-And Why It’s Broken

To legally mine in Iran, you need:

• Approval from the Ministry of Industry to import mining hardware (lead time: 4-6 months)
• A license from Tavanir for industrial electricity (rates: $0.04-0.07/kWh)
• CBI authorization to export Bitcoin (only allowed for trade settlement, not domestic use)
• Use of state-approved mining pools (they take 15-20% of your profits)

Most people can’t jump through these hoops. So they go illegal. They plug rigs into household outlets. They use stolen power. They hide in basements, warehouses, even mosques. The government responds with raids. In the first half of 2025, citizens reported 8,432 illegal operations. Over 2,157 were shut down.

But the rewards for reporting? Just 10% of the recovered electricity cost. That’s not enough to stop the flow. People are tired. They’re angry. They’re not reporting because they can’t afford the electricity themselves.

Why This Isn’t Sustainable

Iran’s power grid was built in the 1970s. It hasn’t been meaningfully upgraded since. Transformers overheat. Lines sag. Voltage drops are common. During peak summer months, electricity demand spikes by 30-40% because of air conditioning. That’s when the government shuts down legal mining operations-for a few weeks at a time.

It’s a band-aid. The problem doesn’t go away. It just gets worse. The International Energy Agency predicts that without major grid upgrades, power shortages in Iran will increase by 25-30% by 2027. And mining will keep growing. The sector is expanding at 23.7% per year. There are now an estimated 3.5 to 4.2 million ASIC mining devices operating across the country.

The CBI bans domestic crypto payments. So people trade Bitcoin on the black market-where it sells for 25-35% more than the official rate. That’s how the underground economy thrives. That’s how the IRGC stays flush with cash. And that’s how ordinary Iranians keep losing power.

What’s Next?

Iran isn’t going to stop crypto mining. It’s too profitable. Too useful for bypassing sanctions. But it can’t keep burning through its grid.

The government’s next move? Smart meters. Real-time monitoring. Mandatory registration of all mining equipment. New tariffs for illegal users. But none of this fixes the root problem: the state is using public energy to fund private, unaccountable wealth.

For now, the pattern is clear: when Bitcoin’s price rises, blackouts follow. When the weather gets hot, the lights go out. When the IRGC needs dollars, Iran’s families go without.

This isn’t innovation. It’s exploitation. And it’s happening right now, in real time, under the eyes of the world.