The Central Bank of Iran is said to be buying large quantities of Bitcoin from mining farms within its national territory.
The Bitcoin miners on the territory of the Islamic Republic of Iran would be selling their coins to the Central Bank. According to information published in the state agency ISNA, the executive branch is said to have issued new regulations.
The miners are said to have been offered to sell their money at Bitcoin to the Central Bank of Iran. In this way, the Persian country is seeking to provide itself with the exchange capacity to buy goods abroad. This is a manoeuvre by the authorities to boost its weakened trade with the outside world.
It should be remembered that the United States resumed its punitive measures against Teheran in 2018. These are mainly based on sanctions and prohibiting third parties, under threat, from trading with Iran.
Bitcoin mining as a lifeline for Iran
Iran’s action to buy the production of Bitcoin mining farms within its territory is a desperate action. It seeks to ease the burden of US trade aggressions. The channelling of the crypto-currencies would enable the nation to import goods for its population, explains USINT.
Another important aspect to mention is that, as a result of the blockade, Iran’s foreign currency reserves are running out. The country’s main export product, oil and its derivatives, has no buyers. This is because the US considers any kind of trade relationship with Tehran a „crime“.
Meanwhile, Iran’s oil reserves are full, which has forced them to lower production to avoid saturation. As a result, the national currency (IRR) is depreciating owing to the shortage of commodities that can no longer be imported.
Seeking a solution in Bitcoin mining has been Iran’s most recent step to remedy this situation.
Until recently, Bitcoin mining was pursued by Tehran. However, it was legalised under strict government supervision, but the veto on trade with this cryptomint remains in place.
Cheap energy for miners
An important feature of Tehran’s situation is that energy reserves are not exported. As such, they are now used for domestic industry. Bitcoin mining in Iran has become one of the major beneficiaries of the low cost of mining.
However, as a condition, miners must submit to certain regulations imposed by the executive. The most recent of these is the edict, in which the Persian energy minister himself, Reza Ardakanian, asks legally registered miners to sell all their tokens to the Central Bank of Iran (CBI).
Iran’s actions are similar to those taken by its partner Venezuela regarding the mining of Bitcoin. This South American nation, in similar conditions as Iran, has been strongly hit and its economy ruined as a result of the punitive measures of the USA in commercial and political matters.
As a possible solution, Caracas has advanced a project to create a national pool for Bitcoin mining activities. According to article 19 of Providence 084-2020, published in Gaceta Oficial 41.969, the affiliation of the miners to this pool will be compulsory.
In addition to the existing sanctions, on 8 October the US announced a new package of punitive measures against 18 Iranian banks. This prevents Iran from using any amount of USD it has in its reserves.
In response, Tehran has reportedly been negotiating to adopt China’s Yuan as its reserve currency. This would allow the economy to revive with the revenues from the international market. However, as that time comes, the country requires a currency to settle its operations.
Bitcoin’s qualities are a tool to avoid this type of action by governments that control traditional finances. Although no details were given of the amount the BCI will use to buy Bitcoin from mining farms, all indications are that it will not be very favourable.
Concerns in the US
The use of crypto-currency to avoid the effects of punitive measures is a constant concern for the US. In this respect, the fact that its economic aggression, aimed at maintaining economic hegemony, is not having any effect could be a „bad example“ of how to make more nations autonomous in their affairs vis-à-vis Washington.
In this connection, in a speech to the Council on International Relations in December, the US special envoy for Iran, Brian Hook, warned of Iran’s steps. „The regime is struggling to acquire international currency, which it needs to import goods such as machinery, industrial products and consumer goods.
Bitcoin mining, in that sense, would be the main source of foreign currency for the Persian government at the moment. „Miners must be willing to supply the BCI directly with cryptom currencies and under the authorized limits,“ the report concludes.
Data to be considered
- Iran’s international reserves have plummeted by 33 per cent in less than two years.
- Since the US broke off the nuclear agreement with Iran in 2018, the Persian nation has suffered significant limitations on its trade.
- Iran officially legalized Bitcoin mining in August 2019. At the same time, it banned trade in crypto coins.
- By supplying the BCI with crypto coins, the country will have more options for importing the products for its economy and population.