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Bitcoin Mining in Iran, IRGC Operations and the Power Grid Crisis

Written by Shahriar Kia
Most Bitcoin miners in Iran belong to the IRGC and use electricity for free
Most Bitcoin miners in Iran belong to the IRGC and use electricity for free

Eleven-minute read

Iran’s state-linked Bitcoin mining farms consist of rows of specialized computer servers (ASIC miners) that guzzle electricity on an industrial scale. In recent years, Iran has experienced debilitating power outages across cities and provinces, leaving homes dark and factories idle for hours or days at a time. Investigations increasingly point to a hidden culprit exacerbating the crisis: large cryptocurrency mining operations run or protected by Iranian state actors, especially the Islamic Revolutionary Guard Corps (IRGC).

These clandestine or semi-official Bitcoin farms draw colossal amounts of power – often at heavily subsidized rates or with no payment at all – effectively diverting energy from the national grid for private gain.

Emergence of Bitcoin Mining in Iran and Link to the State

Iran’s foray into cryptocurrency mining began in the late 2010s as the country sought creative ways to overcome economic isolation. In the wake of renewed U.S. sanctions in 2018, the government turned to crypto as a tool to bypass banking restrictions and generate revenue. By 2019, the clerical regime officially recognized crypto mining as an industry and introduced a licensing regime for miners, offering cheap electricity to attract investment on the condition that all mined Bitcoin be sold to Iran’s central bank. The prospect of subsidized power drew interest from domestic players and foreign partners – notably Chinese investors who set up large Bitcoin farms in Iran’s free trade zones and remote warehouses.

Iran’s energy officials soon noticed the impact. In mid-2019, authorities blamed an “unusual” 7% spike in national electricity usage on a proliferation of unregistered crypto mines. Scattered reports emerged of mining rigs being discovered in surprising locations – from abandoned factories to government offices and even mosques that benefit from free or ultra-cheap electricity. Thousands of illicit machines were confiscated as officials realized that many miners were operating in the shadows to exploit electricity priced at just a fraction of market rates. By 2020, the regime had issued licenses for around 1,000 crypto mining farms, but the majority of activity remained underground. Former president Hassan Rouhani admitted in 2021 that about 85% of mining in Iran was unlicensed – a vast gray economy consuming power without oversight or payment.

Behind this boom was Tehran’s need to monetize its abundant energy resources in the face of sanctions. Bitcoin mining essentially converts energy into cryptocurrency value. With oil exports constrained, the regime effectively “exports” energy by using its surplus oil and natural gas to generate electricity for mining, then selling the earned bitcoins abroad for hard currency or imports. An estimated 4.5% of all Bitcoin mining took place in Iran as of 2021, yielding Iran “hundreds of millions of dollars” in crypto that could help offset the sanctions-hit economy.

IRGC’s Entry: State-Affiliated Mining Operations

By 2019–2020, reports indicate that Tehran’s most influential power brokers – the IRGC and entities under Supreme Leader Ali Khamenei – had moved aggressively into crypto mining. Under Khamenei’s directive, the IRGC partnered with Chinese companies to establish massive mining farms as a way to earn Bitcoin and compensate for Iran’s loss of access to dollars. One high-profile example was a 175-megawatt Bitcoin farm in Rafsanjan in Kerman province, ostensibly a joint venture between an IRGC-linked enterprise and Chinese investors, attracted by Iran’s rock-bottom electricity tariffs.

Such facilities, often located in special economic zones or on IRGC-controlled bases, benefit from dedicated power feeds and minimal scrutiny. IRGC-linked organizations – including large religious foundations like Astan Quds Razavi – formed a veritable “crypto cartel” that plunders national electricity for profit, according to investigative reports. These state-affiliated miners enjoy effectively free energy (or ignore bills entirely), operating with impunity thanks to political connections and armed protection.

Multiple sources highlight the extraordinary privileges granted to the regime’s military and security institutions in the mining sector. In 2022, the parliament quietly passed legislation allowing military bodies to establish their own private power plants and electricity lines. This gave the IRGC direct access to subsidized (and even previously public) electricity resources – infrastructure ostensibly meant for cities and industries – which could now be redirected to secretive crypto farms.

Enforcement agencies have found it nearly impossible to rein in these operations. In one 2021 incident, the Ministry of Energy attempted to shut down an illegal mining center, only for armed IRGC units to physically block the raid and prevent any interruption. The Ministry of Intelligence declined to intervene against the IRGC, illustrating the impunity of the Guards’ mining ventures. While authorities publicly crack down on small-scale “illegal” miners, the largest mining centers – run by or for regime insiders – often remain untouched.

Scale of IRGC involvement

Estimates suggest that well over half of all mining hardware in Iran is operated by state-related entities. According to investigative reporting, roughly 180,000 crypto mining devices were in use in Iran as of 2023, of which about 100,000 belong to the state or firms affiliated with the state (e.g. the IRGC). In other words, the IRGC and its partners control a majority share of Iran’s crypto mining capacity under the cover of a “legitimate” industry. These actors prioritize mining – and the hard currency it yields – over the needs of the public.

Notably, even as the energy crisis worsened, IRGC-affiliated media have sought to deflect blame by highlighting IRGC “crackdowns” on unauthorized miners – a public relations move given that the IRGC itself is not tasked with power enforcement, and its own mines are a core part of the problem.

Electricity Consumption of Iran’s Bitcoin Mines

The energy footprint of Iran’s crypto mining operations – particularly those tied to the state – is enormous. Precise figures are hard to pin down due to the secretive nature of many facilities, but both official and independent assessments agree that miners have become a significant drain on Iran’s power supply:

Several Gigawatts of Load

The regime’s Ministry of Energy has suggested that at peak times crypto mining may be consuming up to 2,000 megawatts (2 GW) of electricity – roughly equal to the output of 2–3 nuclear power plants – despite official orders for miners to shut down during shortages. In late 2024, an energy official noted that illegal mining alone had caused a 16% rise in nationwide power demand compared to the previous year.

This aligns with earlier reports that unlicensed miners were drawing around 2 GW of power in 2020–21 when Iran’s total generation capacity was about 60–70 GW. For context, a single gigawatt can supply a city of hundreds of thousands of people – so 2 GW being siphoned by mining is highly significant.

Official Seizures and Estimates

Iran’s state electric company Tavanir has been conducting a campaign to locate and confiscate illegal mining rigs. Since early 2022, authorities claim to have seized over 252,000 illicit mining devices, which officials say would have drawn an estimated 4 GW of electricity if they had remained online. “That’s equal to the [electricity] usage in three to four small provinces in Iran,” a Tavanir deputy remarked.

Even after these seizures, tens of thousands of unregistered machines are believed to still be operating – and many licensed, high-capacity farms (including those run by state-linked actors) were never part of the clampdown. In early 2023, an Iranian energy spokesperson acknowledged that crypto mining – much of it illegal – was responsible for roughly 0.8 GW (800 MW) of Iran’s electricity demand at the time. This number might seem small in percentage terms, but it can be the tipping point that forces grid operators to impose blackouts during peak seasons. Every 100 MW diverted to mining is electricity not reaching factories, offices, or about 30,000 homes that could have been powered.

Cheap Power = Massive Profit

Iran’s heavily subsidized electricity (with rates as low as $0.01–0.05 per kilowatt-hour for some users) makes crypto mining exceptionally profitable – and thus tempting for those who can get away with it. One analysis found the cost to mine one Bitcoin in Iran can be as low as $1,300, whereas that Bitcoin (at late 2024 prices) was worth $30,000–$40,000 on global markets. This 20- to 30-fold profit margin explains why the IRGC, and other actors are willing to risk illicit mining and ignore grid restrictions.

The energy intensity is staggering mining a single Bitcoin token requires over 300 megawatt-hours of electricity – about as much power as 35,000 Iranian households consume in a day. Put another way, every Bitcoin produced by these farms effectively represents tens of thousands of homes knocked off the grid for a day. The regime’s former energy minister Reza Ardakanian warned that cryptocurrency operations were estimated to be using up nearly 10% of Iran’s total electricity generation by some counts.

Global Share and Oil Equivalent

In 2021, Iran’s bitcoin mining was estimated at 4–8% of the global BTC network. While crackdowns and changes in mining difficulty have reportedly reduced Iran’s share (officials in 2022 claimed it fell to around 0.5%–1%, and under 0.1% by late 2024), the country remains a notable player. Analysts at Elliptic calculated that the electricity being devoured by Iranian miners in 2020 would have required the equivalent of ~10 million barrels of crude oil per year to generate, about 4% of Iran’s annual oil exports at the time. This striking comparison underscores how Iran, in effect, is burning through its oil and gas resources to produce Bitcoin instead of exporting that energy or supplying its own population.

It is important to note that not all of Iran’s power problems stem from Bitcoin mining. Decades of underinvestment, subsidy-fueled overconsumption, and mismanagement have left the electrical infrastructure overstretched. Some experts point out that Iran’s power plants are dilapidated and fuel supply planning is poor, contributing to seasonal shortages. Still, there is broad agreement that unregulated crypto mining – especially by actors insulated from enforcement – has become a major stressor on the grid. By pushing up overall demand and often continuing to run during peak consumption periods, these mining operations make it substantially harder for Iran’s grid to keep the lights on.

Power Outages and Evidence of a Crisis

From 2019 onward, Iranians have endured recurring waves of rolling blackouts, which have grown more severe in the past few years. Summers bring extreme heat and heavy air-conditioning use, while winters strain the system due to heating needs and fuel shortages at power plants. Cryptocurrency mining has amplified the strain in both seasons, to the point that it has been explicitly cited in emergency measures:

2021: Blackouts and a Mining Ban

In January 2021, major cities including Tehran were hit with sudden power outages, spurring public outrage. Officials pointed to a surge in illegal crypto mining as a key culprit (alongside a drought that cut hydroelectric output). That spring, as blackouts continued ahead of the June elections, President Rouhani took the drastic step of banning all cryptocurrency mining for four months (May–Sept 2021) to alleviate the electricity shortfall. He noted that unlicensed miners were consuming enormous power and promised a crackdown.

During this period, Iran’s peak electricity demand was around 60,000 MW; shutting down miners was expected to free up a few thousand megawatts and reduce the daily rationing of power. Indeed, global data showed a temporary dip in Iran’s share of Bitcoin hashrate while the ban was in effect. But enforcement was patchy – especially against IRGC-linked farms – and blackouts persisted through the summer of 2021. The government acknowledged crypto mining as one factor, along with high temperatures and aging infrastructure, in what many dubbed “the summer of darkness.”

2022–2023: Continuing Shortages and Partial Measures

Despite the ban in 2021, mining activity bounced back (legal and illegal) once restrictions lifted, and Iran continued to suffer power problems. In late 2022, as winter approached, Iran’s state power company warned that illegal crypto mining was responsible for about 10% of electricity outages expected in the cold season. Authorities periodically ordered licensed miners to shut off during peak months and claimed to be hunting down illegal farms, but with mixed success.

By mid-2023, Iran still faced what officials called an “electricity gap.” The Energy Ministry again blamed unauthorized crypto miners for a portion of the shortfall, even as it scrambled to secure more fuel for power plants and import electricity from neighbors. Power cuts remained a frequent occurrence in both summers and winters, though slightly less widespread than 2021’s crisis.

Summer 2024: A “Super-Crisis”

Iran was gripped by one of its worst heatwaves in 50 years in the summer of 2024, driving power consumption to record highs. The result was nationwide outages and drastic conservation measures. In August 2024, the government had to fully or partially shut down offices, schools, and universities in 27 of Iran’s 31 provinces to cope with electricity deficits. Even with those emergency shutdowns (aimed at cutting daytime usage), many areas still experienced scheduled blackouts. Iranian media described the situation as a “super-crisis” and reported that the economic damage from power outages exceeds $25 billion per year.

Industries were especially hard-hit – steel mills, cement factories, and other large consumers were forced to halt production for days on end due to power rationing. Amid public frustration, officials once more highlighted illegal crypto mining as an aggravating factor (along with extreme weather). The energy minister at the time offered bounties to citizens who reported clandestine mining operations, admitting that unauthorized miners were putting “huge pressure” on the grid and “violating the public’s rights” by consuming subsidized power.

Winter 2024–25: Cold Weather Outages

The crisis did not relent with the change of seasons. In late 2024, a cold snap led to natural gas shortages (many Iranian power plants burn gas), triggering electricity cuts in large cities. Again, officials implored that all licensed crypto farms shut off and insisted they had halted power to the legal mining centers. However, it’s widely believed that certain politically connected mines continued operating throughout. Notably, even after public appeals, investigators found some facilities – including those tied to the IRGC – drawing power during the grid’s peak strain, their lights humming while neighborhoods nearby went dark. This pattern of uneven enforcement fuels popular anger and suspicion.

The government has often been reluctant to publicly admit how much state-linked crypto mining contributes to the outages. The official narrative typically emphasizes other causes (such as higher household consumption, drought affecting generation, or people running too many air conditioners). But the public and independent observers have connected the dots. By 2025, slogans and social media posts in Iran frequently railed against “mafias” or “cartels” stealing electricity. Even some regime lawmakers and ex-officials have criticized the indulgence of crypto mining, warning that it jeopardizes an already fragile grid.

The Human Toll: Iranians Left in the Dark

The diversion of vast amounts of electricity into hidden crypto ventures has had tangible, painful effects on daily life in Iran. Every megawatt consumed by a Bitcoin farm is a megawatt unavailable for homes, hospitals, and industries. Thus, the misuse of national electricity for private gain directly harms ordinary Iranians in several ways:

Household Hardships

In blackout-hit neighborhoods, families must deal with summer heat and winter cold without heating or cooling. Food spoils in refrigerators; water supply (dependent on electric pumps) can be interrupted. In July 2021, for instance, many Tehran residents found themselves stuck in elevators or stranded in traffic due to sudden power cuts. By 2024, outages were so frequent that people jokingly shared “load-shedding schedules” on social media to plan their day. There is widespread resentment that while citizens endure these hardships and are even asked to conserve energy, certain regime-backed facilities guzzle power nonstop. As one Iranian put it, “We sit in the dark to keep the Bitcoin machines running.”

Healthcare and Safety

Prolonged outages have jeopardized critical services. Hospitals rely on backup generators to keep life-saving equipment running, but not all clinics have reliable backups. During the summer 2024 blackouts, some hospitals in smaller cities were overwhelmed, postponing surgeries and moving patients as air conditioning failed.

Traffic signals and streetlights going out have led to accidents. At night, the darkness raises security concerns for households. It is bitterly noted that IRGC bases and mining centers stayed powered while hospital wings went dim – a stark illustration of misplaced priorities.

Economic Losses

The power cuts have inflicted billions in losses on Iran’s economy. Small businesses, from bakeries to workshops, must shut during outages, losing income. Large industries like steel and cement have reported equipment damage and production delays. Iran’s Bargh News (an energy industry outlet) estimated the total cost of power outages to the economy at over $25 billion annually – costs ultimately borne by society in the form of higher prices, lost jobs, and reduced services. Much of this damage is attributable to the persistent gap between supply and demand in electricity – a gap widened by the unaccounted drain of crypto mining.

Quantifying the Loss

Consider the earlier statistic that each Bitcoin mined uses ~300 MWh, enough to power 35,000 homes for a day. By another measure, Iranian officials say each mining device can consume as much electricity as 10 households. With tens of thousands of such machines running, the math is stark: energy that could sustain hundreds of thousands of homes is instead feeding mining rigs. During peak summer demand, that difference can mean the entire capital city of a province going dark to accommodate the power draw. It is no wonder that public discourse in Iran increasingly frames the regime’s off-the-books crypto mining as “stealing light from people’s homes.”

Public Backlash and Scapegoating

The Iranian public’s frustration has grown alongside their electricity bills. Many see the situation as emblematic of corruption: those connected to power (literally and figuratively) enriching themselves while everyone else suffers rolling blackouts.

State media and officials still often blame ordinary people for using too much power or point to technical issues, downplaying the role of state-sanctioned mining. This narrative has increasingly fallen flat. Iranians widely suspect that many of the “illegal” farms being busted are small fry, whereas the biggest power thieves operate under IRGC protection. Indeed, any time there is a concerted crackdown, it seems to target civilian-run setups (some in remote farms or homes), not the guarded warehouses on military sites. This disparity feeds cynicism and erodes trust in authorities’ willingness to truly address the root causes of the power crisis.

A Political Gamble with Heavy Costs

What began as a creative response to sanctions has morphed into a homegrown energy crisis. Iran’s experiment with state-backed Bitcoin mining—championed by the IRGC and other centers of power—has brought in hard currency but at the expense of destabilizing the national grid and deepening hardships for the public. The IRGC’s crypto operations, though lucrative for the regime elite, are effectively parasitic on Iran’s economy and infrastructure. Each Bitcoin mined under its aegis comes at a steep cost: more fossil fuel consumption, more emissions, and more hours of blackout for homes and businesses.

In trying to bypass sanctions, Tehran inadvertently empowered an “energy black market” dominated by unaccountable institutions. The result: entrenched corruption, capital flight, and a weakened grip over its own energy system.

For millions of Iranians, hope lies in a more accountable and modernized energy policy—one that ends the privileges of “crypto cartels” and restores electricity access as a public right. Unless the shadow networks behind IRGC-linked mining are dismantled or brought under real oversight, there’s no solution in sight. The grid will remain strained, and Iranians will continue to pay the price in flickering bulbs and sweltering nights.

Iran’s case is a cautionary tale: when crypto mining serves opaque power, it doesn’t just undermine energy security—it fuels public resentment and brings a nation closer to breaking point.

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