According to a report by Atlantic Council, Iran is experiencing an economic crisis due to sanctions imposed by the US administration a while ago. However, the Iranian government has had its hands full with simply keeping its economy floating. Because of this, the Iranians are now handling matters on their own and they have turned to Bitcoin mining to overcome the effects of US sanctions.
As per the report, the Iranian economy has been affected by the US sanctions in many more ways than one. And the biggest negative impact among the other effects was that the Iran-based commercial banking institutions were removed out of the society for SWIFT (Worldwide Interbank Financial Telecommunication) network.
And the direct consequence of this move is the removal of the Central Bank of Iran from the rest of the world. As a result of this, it has become impossible for the retail banks to carry out transactions or to conduct any form of business with the banks in the other nations.
Aftermath of U.S Sanctions
Since the sanctions were imposed the Iranians abroad have been stuck. And a lot of Iranians to ensure that they are still able to transact and earn a living, they eventually turned to crypto mining.
However, the viability of this new strategy by the Iranians has also been questioned due to the current state of the crypto market. There has been a downfall in the prices of cryptos because of the extended bear market and eventually making it less profitable to mine cryptocurrencies. And despite the bear market, the citizens of Iran have found a way out to mine crypto assets and to make some income out of it.
A perfect instance of this is the story of Pedram Ghasemi and Ali Hosseini who bought an Antminer S9 which is a crypto mining device for 100 million rials (equivalent to $526 US dollars). They bought the mining device a few months back when bitcoin was trading at $6,500. And in last month alone, bitcoin had shedded more than 45 percent and dropped to as low as $3,500 from around $6,500 where it had stabilized for so many months.
While bitcoin plunged to as low as $3,200 earlier this month, but it recovered a bit and currently is trading at $3,892 with a market cap of $62 billion as per the data obtained from CoinMarketCap.
These Iranian cousins claim that they pay very less for electricity in Iran to power their cryptocurrency mining, as a result, they are still able to be afloat. However, this is only possible because of the large subsidies for energy in Iran.
However, the cousins have a different point of views when it comes to what they plan to do about their mining program in the future. While Ghasemi thinks the crypto market is too complicated and volatile and he wants to get out of it. Hosseini, on the other hand, intends to brave the threats and wants to purchase some more mining devices. He thinks that cryptos are the future and will definitely replace the fiat currency. He also feels that bitcoin prices will surge in the coming years as the supply dwindles.
In spite of the absence of any kind of regulatory framework, the crypto mining remains to be legal in Iran. As the result of the US sanctions, finding liquidity from outside for trading crypto had become hard for investors in Iran. And recently Binance has also warned the Iranian investors to withdraw their funds from the platform as they intend to follow the US sanctions.