Iran’s banks were cut off from the global financial system. Their oil exports plummeted, thus depriving it of a major source of hard currency and revenue, due to the sanctions reinstated by the US in 2018, when President Donald Trump abandoned a landmark nuclear deal.

Iran has been facing severe sanctions from the US, and the country has been facing restrictions in terms of directly transacting in the international market. This has limited its exposure to the US dollar, which is the de facto globalized currency used in international trade.

Iran is the world’s 23rd largest by purchasing power parity (PPP). Some 60% of Iran’s economy is centrally planned. It is dominated by oil and gas production, although more than 40 industries are directly involved in the Tehran Stock Exchange, one of the best performing exchanges in the world over the past decade.

Foreign exchanges versus other fiat are tricky, and things have been challenging to get imports, thus limiting the scope of growth of crypto. All of these have made cryptocurrency an attractive alternative for the country. However, troubled economies embracing Bitcoin is not new.

Iran has been contributing to nearly 4.5% of total Bitcoin Mining.

Authorities in Iran officially recognized cryptocurrency mining during 2019; however, it later established a licensing regime that required the miners to identify themselves to pay a higher tariff for electricity and also to sell their mined Bitcoins to the Central Bank of Iran.  Since, unlicensed facilities were using 6 to 7 times more power; they had to ban all cryptocurrency activities until 22 September, 2021. And, the government did not want to differentiate between licensed and unlicensed mining operations. Probably, cryptocurrency miners might resume their endeavors from September 22, 2021.

The energy minister apologized to the Iranians for undue blackouts, which affected businesses and households in Tehran and several other cities.

It is well known that cryptocurrency adoption will come from unstable nations. Countries facing inflation and sanctions need a way out, and they will find BTC and digital assets as a way out.

Iranians have recognized cryptocurrency as both a hedge versus the devaluation of the Rial and a means of overcoming crippling international embargoes.

The proposed legislation in Iran will authorize the ministry of industries, mines, and commerce to supervise cryptocurrency mining. The ministry will permit licensing, supervising, and support companies mining international cryptocurrencies, focusing on raising $500 million in cryptocurrency for the state in the next Iranian calendar year (starting March 21, 2022) to further and increase this by 10 percent a year.