Iran's Minister of Energy Reza Ardekanian admitted that the power outages might have been caused by bitcoin farms but failed to mention that Chinese companies owned some of the country's biggest bitcoin farms.
Bitcoin is a virtual currency with rising value. Farming or mining bitcoin is a way to earn cryptocurrency without paying money for it. Essentially, "farmers" are awarded bitcoin for verifying transactions in bitcoin. They are basically acting like auditors, verifying the legitimacy of transactions. But bitcoin farming requires a lot of energy. Bitcoin farming on a large scale requires thousands of computers and cooling systems, which are grouped together in centers called bitcoin farms.
That makes Iran a perfect location for bitcoin farms as the country produces electricity in abundance and at a low cost. Electricity goes for around 4 cents per kilowatt-hour in Iran, which is considerably lower compared to 13 cents per kilowatt-hour in the United States. (Related: Bitcoin mining now consuming more electricity than 159 countries including Ireland and most of the countries in Africa.)
Chinese companies have jumped at the opportunity and invested in bitcoin production in Iran, but the numerous power outages and a growing anti-Chinese sentiment among the Iranian population could drive them away.
Iranian authorities shutter bitcoin farms to pacify public
The Iranians reacted with outrage when a video appeared online on Jan. 11, showing a Chinese worker demonstrating the different steps needed to build a bitcoin farm in Iran. The video was first shared by RHY, the Chinese company running that particular bitcoin farm.