Tehran, beset by blackouts, blames bitcoin

TEHRAN — Iran’s capital and major cities plunged into darkness in recent weeks as rolling outages left millions without electricity for hours. Traffic lights died. Offices went dark. Online classes stopped.

With toxic smog blanketing Tehran skies and the country buckling under the pandemic and other mounting crises, social media has been rife with speculation. Soon, fingers pointed at an unlikely culprit: bitcoin.

Within days, as frustration spread among residents, the government began a wideranging crackdown on bitcoin processing centers, which require immense amounts of electricity to power their specialized computers and to keep them cool — a burden on Iran’s power grid.

Authorities shuttered 1,600 centers across the country, including, for the first time, those legally authorized to operate. As the latest in a series of conflicting government moves, the clampdown stirred confusion in the crypto industry — and suspicion that bitcoin had become a useful scapegoat for the nation’s deeperrooted problems.

Since former President Donald Trump unilaterally withdrew in 2018 from Tehran’s nuclear accord with world powers and reimposed sanctions on Iran, cryptocurrency has surged in popularity in the Islamic Republic.

For Iran, anonymous online transactions made in cryptocurrencies allow individuals and companies to bypass banking sanctions that have crippled the economy.

“Iranians understand the value of such a borderless network much more than others because we can’t access any kind of global payment networks,” said Ziya Sadr, a Tehran bitcoin expert. “Bitcoin shines here.”

Iran is now going after unauthorized bitcoin farms with frequent police raids. Those who gain authorization to process cryptocurrency are subject to electricity tariffs, which miners complain discourage investment.

“The priority is with households, commercial, hospitals and sensitive places,” said Mostfa Rajabi Mashhadi, spokesman of Iran’s electricity supply department.