US sanctions and a spiralling fiat have driven the Iranian government to make a U-turn on cryptocurrency Miner. Now they have their first big investor.
Turkish cryptocurrency mining company, iMiner, has been issued a license by the Iranian government to mine in the country. They have invested $7.3 million dollars in setting up the largest facility of its kind in Iran.
Less than a year ago, a facility such as this would have prompted arrests and fines from the government. Iran’s government has long been suspicious of cryptocurrency and its associations with illegal transactions. Most importantly, it was afraid that cryptocurrency might undermine the country’s fiat currency, the Rial. So why is Iran now giving foreign mining companies the go ahead to operate within its own borders?
There’s little left to undermine
The Government has announced the transition from Rial to the Toman, a process they say will take around two years.
The official exchange rate is 42,000 Rial to the Dollar. On the black market however it would cost you 156,000 Rial to just one Dollar. Due to such an unstable currency, spiralling in the death throes of hyperinflation, the price of a Bitcoin in Iran sits at nearly $35,000.
With their fiat currency continuing to struggle, there is no longer any need to be afraid of the potential risks posed by cryptocurrency. As such, they seem to have chosen to embrace it.
Iran is faced with seemingly insurmountable obstacles for its economy at this time. US imposed sanctions since 2018 have put strain on their economy and helped to induce hyperinflation. More recently, the COVID-19 outbreak struck particularly hard in Iran, whilst on a global scale it had decimated the price of oil, Iran’s major export.
Mining cryptocurrency looks to be a great way to circumvent US restrictions as well as providing business during this difficult time. Iran could be a great fit for crypto mining companies. They have access to cheaper power from the state’s extensive supplies, which consist of not only natural gas and oil, but hydro-electric stations also. It’s also a new sector, so there is space for plenty of new competing companies, and healthy competition is always good for business.
It could well be that Iran becomes a fertile space for future crypto mining, a relationship born out of necessity rather than desire.