As government officials in Iran warn of high electricity consumption in cryptocurrency mining farms in Iran, a mining computer producer says with the high price of electricity, only Chinese Bitcoin miners with special privileges can make a profit.

Media reports say the electricity sold to Chinese Bitcoin farms in southeast Iran is cheaper than the energy consumed by Iranian cryptocurrency miners. However, they did not mention the difference between the two rates. The Iranian government said in January that cryptocurrency annual mining reaches $660 million.

Abouzar Zarei who runs a mining machines manufacturing factory in Lamerd in Fars Province, told Ensaf News website in Tehran on Thursday April 8 that Bitcoin mining is currently an expensive business and only Chinese ventures in Iran can benefit from the situation.

Zarei said that "Bitcoin mining is a high energy consuming business, but the government charges Bitcoin miners at the same rate it exports energy to other countries." This is not economic for anyone except for the Chinese Bitcoin miners who import their own machines."

Bitcoin mining, which has a high carbon footprint, is carried out in high-tech data centers making huge demands on the electricity grid due to the many computers required to process and verify transactions before they are recorded on the cryptocurrency ‘blockchain.’

In January, high electricity consumption by Chinese Bitcoin miners was partly blamed for nationwide blackouts and power outages. As a result, Iranian power plants came under pressure and subsequently turned to cheap fossil fuels that led to an environmental crisis and most Iranian cities were drowned in smug.

At the time, several media reports attributed the problem to gigantic Bitcoin farms in Rafsanjan in southeast Iran. This is a Special Economic Zone in which Chinese Bitcoin miners have been active during the past year.  

Media reports said that an adviser to President Hassan Rouhani had opened the Bitcoin farm in 2019 disguised as a "data center." The local governor of Rafsanjan described the facility as "the biggest data center of the Middle East." At the same time, some Iranian media, including the hardliner Basij News linked the facility to the Rouhani administration's distribution of privileges among "insiders."

An Iranian reporter, Massoud Nouri working with the official news agency IRNA and Hamshahri newspaper, broke the news that the Chinese were mining Bitcoins in the area in collaboration with "a military organization" using cheap electricity while Iranian Bitcoin miners have to pay for their energy consumption at a higher rate. He did not name the military organization.

According to Tejarat News, Nouri had said that some 10,000 machines were constantly running in the farm in Rafsanjan. Meanwhile the Blockchain Association of Iran reported that the farm is located adjacent to high-voltage energy lines and consumes 175 Megawatts of energy.

Explaining the pressure bitcoin mining exerts on Iran's power generation facilities, conservative newspaper Resalat wrote in January that machines in Rafsanjan consume electrical power as much as the annual consumption of 24 homes to produce every Bitcoin. 

Meanwhile, there have been reports in international media about the Iranian government using cryptocurrencies in order to circumvent US sanctions.

In a January 12 report, Fars news agency, close to the revolutionary guards (the IRGC) claimed that the farms in Rafsanjan used only 4 percent of the total electricity that was generated in Iran.

Also in January, an economic news website in Kerman near Rafsanjan quoted Mohammad Hassan Ranjbar, the CEO of the Sino-Iranian Investment Company as having said that "due to sanctions, China is currently the only country that can invest in Iran."   

The reference to the Bitcoin farm in Lamerd by a mining machine manufacturer came following protests by Iranians to a recent long-term agreement between Tehran and Beijing. The details of this agreement are still unknown.