Iranian Energy Subsidies for Crypto Mining: How Cheap Power Fuels a National Grid Crisis

Iran produces Bitcoin for as little as $1,300 per coin. Meanwhile, the average household in Tehran goes without power for 10 hours a day. This isn’t a glitch-it’s policy.

Why Iran Lets Miners Drain the Grid

Iran’s government doesn’t just allow cryptocurrency mining-it actively encourages it. Electricity for licensed miners costs between $0.01 and $0.07 per kilowatt-hour. In most countries, that same amount of power would cost 10 to 100 times more. In Italy, mining one Bitcoin eats up $306,000 in energy. In Iran? It’s under $1,300. That’s not a bargain. It’s a state-funded giveaway.

This isn’t about innovation. It’s about survival. With international sanctions cutting off access to global banking systems, Iran turned to crypto mining as a way to earn foreign currency. The Central Bank of Iran now permits licensed miners to sell their Bitcoin for trade settlement. That means mined coins are used to buy food, medicine, and machinery from countries that won’t touch Iranian banks. The result? Over $1.5 billion in annual revenue from mining, according to AInvest’s 2025 report.

But who pays the real price?

The Real Cost: Power Outages and Public Anger

Crypto mining in Iran uses nearly 2,000 megawatts of electricity-about 5% of the country’s total power output. That might sound small, but it’s the difference between lights on and lights off for millions. During summer 2025, when air conditioning demand spiked, the grid buckled. Blackouts hit 12 hours a day in major cities. Meanwhile, mining farms in Ahvaz, buried inside the tunnels of a disused stadium, ran nonstop.

On social media, Iranians are furious. A tweet from @IranEnergyCrisis captured the mood: “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 got over 12,000 shares. On Reddit’s r/Iran, 92% of 1,450 comments blamed mining for the outages. Telegram channels now share real-time blackout maps that line up perfectly with known mining locations. When Bitcoin’s price jumps, blackouts spike within 48 hours.

The government’s own data confirms it. In mid-2025, during a nationwide internet shutdown linked to regional conflict, power use dropped by 2,400 MW-not because factories shut down, but because over 900,000 illegal mining rigs were suddenly offline. That’s not a coincidence. That’s proof of scale.

Legal vs. Illegal: A Game of Whack-a-Mole

There are two kinds of miners in Iran: the licensed and the illegal. The licensed ones pay $0.04-$0.07/kWh and jump through hoops: they need approval from the Ministry of Industry, registration with the power company, and permission from the Central Bank to export Bitcoin. The process takes 3-6 months. Approval rates? Below 40%.

Meanwhile, illegal miners pay nothing. They plug into household lines, use stolen transformers, or tap into industrial substations. They don’t need licenses. They don’t pay taxes. And they’re everywhere. The Energy Ministry estimates illegal miners consume up to 2 gigawatts daily-equivalent to the entire power usage of Tehran, a city of 9 million people.

The government responds with raids. In early 2025, they launched a reward program: citizens who report illegal mining get 10% of the recovered electricity costs. In six months, they received 8,432 tips and shut down 2,157 operations. But for every rig seized, five more pop up. The IRGC controls an estimated 60% of all illegal mining, according to energy analyst Mohammad Bagher Nobandegani. That’s not crime-it’s a state-backed revenue stream.

Who Benefits? Who Gets Left Behind?

The money flows upward. Licensed miners pay a 15-20% commission to state-approved mining pools. The IRGC, through front companies, takes an estimated $400-500 million per year from illegal operations. That cash funds everything from missile programs to proxy militias.

Meanwhile, ordinary Iranians pay with their daily lives. A mother in Shiraz can’t refrigerate her child’s insulin. A factory in Isfahan shuts down because the machines can’t restart after a 6-hour blackout. A student in Mashhad can’t study after dark because the power cuts at 8 p.m. every night.

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, bypassing central bank oversight.”

Energy Minister Ali Akbar Mehrabian defends the system: “Regulated mining brings in $800 million in foreign exchange.” But that’s the problem. The money isn’t going to hospitals or schools. It’s going to weapons and covert operations.

Why Iran Won’t Stop

Iran could shut down mining tomorrow. But then it loses its only legal way to bypass sanctions. The U.S. and EU block Iranian banks. No wire transfers. No credit cards. No PayPal. Crypto is the workaround. Bitcoin becomes Iran’s digital dollar.

That’s why the government doesn’t ban mining-it just turns it off when it hurts too much. In 2021, 2022, and 2023, they shut down all legal mining during summer months when electricity demand peaked. They let it run again in winter, when heating needs are high and power use drops. It’s not a policy. It’s a survival tactic.

The International Energy Agency warns that without major grid upgrades, Iran’s power shortages could grow by 25-30% by 2027. But upgrades cost billions. And billions are being spent on mining rigs instead.

The Global Comparison: Why Iran Stands Out

Kazakhstan used to be the world’s second-largest Bitcoin miner after the U.S. But after Russia’s invasion of Ukraine, Kazakhstan tightened its energy rules. Mining costs there jumped to $5,000 per Bitcoin. Russia cracked down. China banned it entirely. Even the U.S. saw energy prices climb.

Iran is the last place on Earth where you can mine Bitcoin cheaper than the cost of a decent smartphone. And it’s not because of technology. It’s because the government is willing to let its people suffer for it.

There’s no other country where mining consumes 15-20% of the electricity imbalance. No other country where citizens openly call it “economic terrorism.” No other country where the military runs the power grid-and the miners.

What’s Next?

Iran’s government has started requiring all mining operations to install smart meters and register with industrial facilities. But enforcement is patchy. Illegal miners still thrive. The Central Bank still allows crypto for trade. The IRGC still controls the grid.

The only real solution? A complete overhaul of Iran’s energy infrastructure. But that would take $20 billion and a decade. And right now, the regime would rather spend that money on mining rigs.

For now, Iran’s crypto mining boom isn’t about innovation. It’s about control. And the cost? Millions of people living in the dark.