Iran's Illegal Bitcoin Mining Surges Amid 38% Inflation

Iran’s Bitcoin mining sector is characterized by a significant amount of illegal operations, with individuals, schools, and mosques exploiting subsidized electricity to mine Bitcoin. This widespread illicit activity complicates efforts to accurately quantify the nation’s Bitcoin holdings. Despite the issuance of official licenses for mining since 2019, the majority of mining activities remain underground, driven by high electricity costs and international sanctions. This makes Iran a notable yet opaque player in the global Bitcoin network.

Estimates of Iran’s total mined Bitcoin vary widely, with figures ranging from 60,000 to 200,000 BTC. This discrepancy highlights the challenges in tracking illicit mining operations and their economic impact. The underground nature of these operations, driven by prohibitive electricity tariffs for licensed miners, further obscures accurate measurement and tracking. Licensed mining farms in Iran face high electricity tariffs, often exceeding those paid by energy-intensive industries such as iron and steel. This economic pressure incentivizes miners to operate illegally, leveraging free or subsidized electricity available to mosques, schools, and government-linked entities. Iran’s state electricity company estimated around 700,000 illegal mining rigs were active in early 2025, placing significant strain on the national grid and contributing to frequent power outages. To combat this, authorities have implemented bounty programs to identify unlawful mining operations, yet enforcement remains challenging.

The Islamic Revolutionary Guard Corps (IRGC) is believed to be a major actor in Iran’s crypto mining ecosystem, operating covertly to maximize Bitcoin production while evading sanctions. Although speculation arose following a U.S. strike on the Fordow nuclear site—located in a mountain with robust electrical infrastructure—there is no concrete evidence linking the facility to mining activities. Industry analysts caution against overinterpreting short-term fluctuations in Bitcoin hashrate, noting its inherent volatility. Nonetheless, the IRGC’s involvement highlights the strategic importance of crypto mining as a tool for circumventing economic restrictions.

Crypto mining and trading have become widespread among the Iranian population as a hedge against hyperinflation, which currently exceeds 38%. Social media activity reveals a vibrant community of at-home miners, with some entrepreneurs marketing soundproof mining equipment to mitigate noise concerns. However, not all crypto ventures have succeeded; for instance, the Telegram-based game Hamster Kombat attracted millions of Iranian users but ultimately failed to deliver meaningful financial returns, illustrating the risks associated with speculative crypto projects.

The surge in illegal mining has placed unprecedented demand on Iran’s electricity grid, prompting government efforts to regulate and control the sector. While licensed miners are required to sell their Bitcoin directly to the central bank, underground miners retain their earnings, further complicating regulatory oversight. The government’s dual approach—issuing licenses while cracking down on illicit operations—reflects the tension between economic necessity and energy management in a sanctioned economy.

Iran’s Bitcoin mining industry remains a complex and largely opaque sector shaped by economic sanctions, inflation, and energy policy. The predominance of illegal mining operations, fueled by subsidized electricity in institutions like mosques and schools, obscures the true scale of Iran’s Bitcoin holdings. While estimates vary widely, it is clear that crypto mining serves as both a financial lifeline for many Iranians and a strategic tool for the government. As global scrutiny intensifies, understanding the dynamics of Iran’s crypto mining landscape will be essential for policymakers and investors alike.