Iran is bringing back cryptocurrency mining, but China shows no signs of changing its mind.
- From September 22, the Iranian government will allow approved cryptocurrency miners to resume their operations.
- In May, the country announced restrictive measures in response to a rising power deficit that was generating blackouts in many parts of the country.
- China, on the other hand, is firmly tightening down on cryptocurrency mining and has no plans to reverse its prohibition.
- While Iran endorses Bitcoin for self-preservation, China is against decentralised systems to retain maximum control and dominance.
Regulations around cryptocurrency saw a lot of upheaval over the past one year world over. While China continues to maintain its strict anti-cryptocurrency stance, other countries — like Iran — are softening their stance.
The ban on cryptocurrency mining will be lifted on September 22nd, according to Iran's state-owned company for power generation and distribution, Iran Power Generation, Distribution, and Transmission Company (Tavanir).
The Financial Tribune reports that, the utility would begin resupplying electricity to mining farms in an effort to gather Bitcoin and other cryptocurrencies, which are considered the world's newest financial assets.
On the other hand, the Chinese government has ordered local electrical manufacturers not to sell any surplus capacity to Bitcoin miners, whether they are Chinese or not. Companies operating in provinces where mining is prohibited have until August 24 to completely dismantle mining farms and remove any remaining mining equipment.
Iran is rolling back its cryptocurrency mining ban
The county's Ministry of Industries, Mining, and Trade is likely to issue an official directive soon, lifting the limitations that were imposed on all miners in May. Simply put, Iran's national grid will once again be fully operational for cryptocurrency mining, a one-of-a-kind programme aimed at reducing the country's reliance on the globalised US dollar and other fiat currencies.
The spokeswoman for the nationalised energy company, Mostafa Rajabi Mashhadi, noted that now that summer is over, electricity usage in the Islamic Republic is projected to drop in the following months.
Because the country's electricity deficit was severely high in the hot month of May, it was compelled to implement regressive measures such as a blanket ban. This resulted in blackouts and load shedding across the country. Iran was compelled to ration electricity and tighten down on miners because crypto mining is an energy-intensive operation.
While Iran endorses Bitcoin, China is sure it wants none of it.
China is adamant that it will have no dealings with cryptocurrencies. Despite a local trading restriction since 2017, Chinese mines once accounted for approximately 80% of global cryptocurrency commerce. All of this came to a screeching halt in May, when Beijing ordered provincial governments, regulators, and energy firms to cease supplying energy to mining farms. Miners had little choice but to cooperate and devise a new strategy to keep their operations afloat.
Gradually, all miners started migrating out of the country and found a new home in many parts of the United States, Kazakhstan, Canada, and even Russia. According to a recent judgement by the high court of northern Shandong province, Chinese law does not protect cryptocurrencies, and the assets have never had legal validity. The decision is the last nail in the coffin for cryptocurrencies in the country, and there's little chance of a reversal.
China wants the yuan to be the dollar, but Iran wants a dollar equivalent
Iran is subject to harsh US sanctions and is unable to deal directly on the international market. This reduces its reliance on the US dollar, which is frequently seen as the de facto global trade currency. Foreign exchange against other fiat currencies is extremely difficult, making it difficult to get imports and, as a result, limiting the scope of expansion. As a result, cryptocurrency becomes a viable option for the country.
According to an Elliptic analysis, Iran accounts for 4.5 percent of global Bitcoin mining revenue, bringing in roughly $1 billion each year.
China's objective is quite different. It has always emphasised a centrally backed digital currency (CBDC), and its e-yuan experiment is gradually reaching out to more people. Simultaneously, the government has cracked down on private participants in the payments business, with the goal of progressively phaseing out closed ecosystems and establishing a centrally regulated digital currency that can be used globally.
China intends to construct a dollar-equivalent on a worldwide scale as its industrial power grows in Southeast Asia, Africa, and other developing countries. Its goal is to gain an early-adopter advantage and so dominate the global economy. At the same time, a central system grants it complete control over censorship, monitoring, and even monetary policy in the country.
The two countries are in completely different situations and trying to leverage the crypto boom in their favour.