Iran's Bitcoin Mining Farms Are Gutting the Industrial Sector and Leaving Homes in the Dark

Iran's state-linked Bitcoin mining farms consist of rows of specialized computer servers (ASIC miners) that guzzle electricity on an industrial scale.

Iran is facing a debilitating energy crisis, with rolling blackouts plaguing cities and towns for hours or days at a time, cutting power to homes, factories, and critical services. This has sparked public unrest and socio-economic hardship. While various factors contribute to the fragility of Iran’s electrical infrastructure—including decades of underinvestment, overconsumption fueled by subsidies, and poor maintenance—a lesser-known but increasingly discussed aspect is the role of cryptocurrency mining, especially on a large scale by the Islamic Revolutionary Guards Corps (IRGC) and other state-affiliated actors.

As the U.S. sanctions on Iran began to stiffen in 2018, and after noting how cryptocurrency could be used to bypass banking restrictions, Iranian officials started exploring it as a revenue generator. By 2019, the clerical regime had officially recognized crypto mining and introduced a licensing regime, offering miners cheap electricity and promising to buy any mined Bitcoin at an “official rate” from those who had licenses. The prospect of subsidized power drew interest from domestic players and foreign partners, such as 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, they blamed an “unusual” 7% spike in national electricity usage on a proliferation of unregistered crypto mines. Scattered reports appeared of mining rigs being discovered in surprising locations—abandoned factories, 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 without registering and exploiting electricity priced at just a fraction of its true market value. By 2020, the regime had issued licenses for about 1,000 crypto mining farms, but the majority of activity remained unlicensed. Former president Hassan Rouhani admitted in 2021 that about 85% of mining in Iran was still illegal.

Bitcoin mining is essentially an energy-intensive process that converts electricity into cryptocurrency value. With its oil exports constrained by sanctions, the Iranian regime was effectively exporting energy in a roundabout way by using surplus oil and natural gas to generate electricity for miners, who in turn sold the earned bitcoins to generate hard currency or imports for the regime. At its peak in 2021, Iran was reportedly performing an estimated 4.5% of all Bitcoin mining, yielding Iran hundreds of millions of dollars in crypto.

Enter the IRGC and State-Affiliated Actors

By 2019–2020, reports began to emerge that Tehran’s most powerful institutions—the IRGC and entities under Supreme Leader Ali Khamenei—had become heavily involved in crypto mining. Following Khamenei’s directive to find new avenues for revenue generation due to the U.S. sanctions, 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 example is a 175-megawatt Bitcoin farm in Rafsanjan in Kerman province, a joint venture between an IRGC-linked enterprise and Chinese investors, who were reportedly attracted by Iran’s rock-bottom electricity tariffs. Such facilities, usually 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 “crypto cartel” plundering national electricity for profit, according to Ars Technica. These state-affiliated miners enjoy effectively free energy (or they simply never pay their bills), operating with impunity thanks to political connections and, if needed, armed protection.

Several sources highlight the extraordinary privileges granted to the regime’s military and security institutions in the mining sector. In 2022, the parliament passed legislation allowing military bodies to establish their own private power plants and electricity lines. This move was largely overlooked but grants the IRGC, already known for its vast economic empire, even greater control over energy infrastructure. In essence, this legislation siphons subsidized (and previously public) electricity resources—infrastructure meant for cities and industries—into the IRGC’s coffers for use in its own ventures, likely including large-scale crypto mining.

Enforcement agencies have found it nearly impossible to shut down these state-affiliated miners. In one incident in 2021, the Ministry of Energy attempted to close an illegal mining center, but armed IRGC units arrived to physically block the raid and prevent any interruption. The Ministry of Intelligence declined to intervene against the IRGC, showcasing the impunity enjoyed by the Guards’ mining ventures. While officials publicly cracked down on small-scale “illegal” miners and reported confiscating thousands of machines, the largest mining centers—run by or for regime insiders—were never touched.

Scale of IRGC Involvement

According to an analysis by the crypto intelligence firm TRM Ingelligence, at the height of Iran’s