Farhad Shahroki, representative of the people of Sistan and first vice president of the Energy Commission of the Islamic Consultative Assembly, examined Iran's electricity imbalance and the impact of cryptocurrency mining on electricity consumption in a note. He emphasized that Iran's electricity imbalance is a structural and multifactorial issue, and reducing it to cryptocurrency mining is not technically or policy-wise accurate.
Factors Affecting Electricity Imbalance
Shahroki stated that lack of investment in developing production capacity and infrastructure, aging infrastructure, growing demand, and fuel limitations for power plants are among the factors shaping the current state of the electricity industry. He reviewed a recent report from the Research Center of the Parliament, which analyzed the impact of cryptocurrency mining on the country's electricity consumption from two independent pathways: first, an estimate based on Iran's share of the global hash rate, and second, using nationwide internet outages as a "natural experiment" to analyze changes in the base load of the electricity network.
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Estimation of Electricity Consumption from Cryptocurrency Mining
The recent report from the Research Center of the Parliament estimated the maximum electricity consumption from cryptocurrency mining to be around 1037 to 1150 megawatts. Additionally, the analysis of load changes during the nationwide internet outage showed an average reduction of about 927 megawatts in the base load. This number indicates a hidden load that is almost continuous, equivalent to a large power plant. However, Shahroki emphasizes that not all of this reduction in consumption can be attributed to miners, and part of the drop in consumption may relate to data centers and communication infrastructures dependent on the internet.
Shahroki adds that distinguishing between "capacity" and "energy" in analyzing electricity imbalance is crucial. The estimate of 927 megawatts compared to a deficit of about 14.7 thousand megawatts at peak summer demand is approximately 6 percent. Therefore, cryptocurrency mining cannot be introduced as the "main factor" of the country's electricity imbalance. However, mining, due to its 24-hour activity, accounts for a significant share of the energy shortfall.
The real cost of cryptocurrency mining is not solely reflected in the electricity bill. On average, maintaining a load in the range of 927 megawatts requires about 8.46 billion kilowatt-hours of electricity annually, which is estimated to be equivalent to the consumption of about 2.1 billion cubic meters of gas. This cost should be interpreted with caution, as it is based on the assumption of energy supply from thermal power plants and the valuation of alternative fuels.
In conclusion, Shahroki emphasized the distinction between legal and illegal mining and called for precise policymaking in this area. Although cryptocurrency mining in Iran has entered a regulatory framework, a clear distinction must still be established between legal and illegal activities.
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