Iran’s cryptocurrency mining sector is spiraling out of control, with government officials confirming that over 95% of the country’s 427,000 active mining devices are operating illegally. These unlicensed operations, drawn by heavily subsidized electricity, have turned Iran into the fourth-largest crypto mining hub in the world, but at a devastating cost to the nation’s power grid.
Illegal Mining Consumes Massive Energy
According to Akbar Hasan Beklou, CEO of the Tehran Province Electricity Distribution Company, unlicensed crypto miners collectively consume more than 1,400 megawatts of electricity, enough to power several major cities. The miners operate continuously, exploiting Iran’s ultra-cheap electricity rates, which remain among the lowest globally due to state subsidies.
While mining remains technically legal in Iran under government-issued licenses, the cost advantages have pushed most operators underground. Officials estimate that fewer than 5% of miners hold valid licenses, while the rest evade monitoring and taxation by running unauthorized equipment across industrial zones, warehouses, and even residential buildings.
National Grid Under Pressure
This widespread illegal activity is inflicting serious damage on Iran’s already fragile power infrastructure. The country’s electricity network, weakened by years of underinvestment and U.S. sanctions, is now struggling to meet demand.
Officials say that illegal mining operations are responsible for up to 20% of Iran’s total power deficit, contributing to recurring blackouts and grid instability during peak usage months. The problem is especially acute during summer, when the national grid faces surging consumption for air conditioning and industrial use.
Crackdowns and Continued Defiance
In response, Iranian authorities have intensified crackdowns on illegal miners. Raids across multiple provinces have led to the seizure of tens of thousands of mining rigs, with officials promising stricter penalties and tighter monitoring systems. However, enforcement remains challenging due to the sheer scale and decentralization of the illegal mining network.
Despite repeated government warnings, thousands of underground operations reportedly remain active, continuing to draw massive amounts of power. Analysts warn that without a structural fix, such as a shift in electricity pricing or a digital asset regulatory overhaul, Iran’s energy system could face worsening strain in 2026.
A Global Crypto Paradox
Ironically, Iran’s position as a top global mining center is both an economic opportunity and an existential risk. Crypto mining has provided the country with a pathway to bypass sanctions and access international liquidity, but its unchecked growth has become a national energy liability.
As the government tries to balance its crypto ambitions with energy security, Iran’s mining dilemma underscores a broader global tension: the conflict between digital asset growth and sustainable energy policy.