July 8, 2019 | AtoZ Markets - Saeed Zarandi, an Assistant Minister of Industry, Trade, and Supply of Iran accuses the US of undermining bitcoin activities. According to local media, the politician believes, that White House is working to block bitcoin mining in Iran.
Bitcoin activities in Iran have no boundaries but lots of restrictions
It is worth to mention, that Iran could be considered as a paradise for bitcoin activities, especially for mining. One of the main reasons is the very low electricity price.
According to the Global Petrol Prices research, while 1kWh costs on average $0.14 in the U.S., Iranians pay about $0.03 due to a government subsidy. The cheapest energy makes mining extremely profitable for crypto enthusiasts in Iran.
However, due to growing crypto mining activity, Iran’s infrastructure was suffering the consequences of a growth in consumption higher than the power generation capacity.
As a result, at the end of June 2019, the Iranian government decided to forbid crypto mining activities in the country, until the new prices are approved.
Notable, that last year, Iran announced of working on their own national crypto to combat U. S. sanctions. The same year in November, Iranian media reported that the national crypto entered the pilot mode. Back then the name of the national crypto of Iran was not revealed.
However, 5 months ago, a local English daily reported about gold-backed cryptocurrency, known as Peyman launch in Iran. The media was saying then, that the new stablecoin was a result of a collaboration between four partner banks Parsian Bank, Bank Pasargad, Bank Melli Iran, Bank Mellat and Ghoghnoos Company.
It seems, that despite all the failures, the Iranian government is optimistic and confident that cryptos can help provide a better future for the country’s citizens.
The U.S. sanctions cause a downfall of the Iranian economy
Re-imposition of US sanctions last year had a massive impact on the economy of Iran after Trump decided to abandon the Nuclear Deal. By the period of May 2019, the Iranian Rial has lost 60% of its value against the US dollar and has led to shortages of imported goods and products. According to the latest IMF reports the country’s GDP had contracted by 3.9%. In addition, the White House has ended exemptions from sanctions for the 8 countries that do business and purchase oil from Iran – China, India, Japan, South Korea, Taiwan, Turkey, Greece, and Italy.
In March 2019 oil exports fell to an average of just 1.1 million barrels per day from 3.8 million barrels, as it was at the beginning of 2018. Moreover, 8 months ago the U.S. officially removed commercial banks in Iran from the SWIFT network.
Back then the crypto community suggested, that disallowing Iran from working with financial institutions worldwide would push the country to faster crypto adoption.
However, Iranian politicians assume, that now the U.S. government has its eyes set on the bitcoin activities in Iran, which are capable to combat financial sanctions.
Bitcoin activities restrictions in Iran as a part of the US and China trade war
Experts suggest, that if assistant Minister of Industry, Trade, and Supply Saeed Zarandi is right, Iran may be just a piece in the ongoing game between China and the US.
The government of China applies the toughest restrictions on most of the bitcoin activities in the country, but it has not shown yet official interest in promoting bitcoin mining.
However, Iran’s Minister for Communications and Information Technology, Mohammad Javad Azari Jahromi, during one of the latest interviews on local TV noted, that the Chinese private sector, moved to Iran to take advantage of its cheap electricity. He mentioned, that “a major part of cryptocurrency mining used to be done in China before Iran became attractive for miners”
Notable, just a month ago, Localbitcoins announced that it would not allow Iranians to use its platform. In addition, Binance and other exchanges also withdrew support for the Iranian citizens, complying with the unilateral sanctions imposed by the U.S. government.
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