In Recent Years, Various Excuses Have Been Put Forward For The Recurring Problem Of Power Outages In The Country; But What Is The Main Reason For These Outages? Has Mining Caused Power Shortages?

Power outages have become a relatively constant occurrence in Iran in recent years; However, over the past year, a new issue has emerged as the cause of blackouts: the extraction of ciphers. Since the extraction of cryptocurrencies in Iran has been known as an industry since 2009, all stages of extraction, from the preparation and purchase of the extraction device to the manner and time of using energy and even the sale of extracted bitcoins, are carried out under the law.

This spring, the Minister of Energy cited several factors as the reason for the power outage: reduced rainfall and reduced capacity of hydropower plants, early heating and more use of cooling equipment, and illegal extraction of ciphers; Factors that, on closer inspection, do not appear to be very effective in frequent blackouts.

How much does the decrease in rainfall and heat affect the lack of electricity?

According to Tavanir, hydropower plants provide less than 15 percent of the country’s total electricity, and this year they have delivered 4,000 megawatts less to the grid due to a 40 percent drop in rainfall; As a result, the task of supplying electricity fell to thermal power plants. It is worth mentioning that the current capacity of electricity production in the country is about 85,000 MW and the production of practical electricity is about 60,000 MW; Of course, the Ministry of Energy has a duty to increase electricity generation capacity by 5,000 megawatts per year.

Due to the increase in population and the expansion of industries, this issue has been emphasized in the country’s development plan.

If you recall, last winter we also saw frequent power outages.

 At that time we heard that severe air pollution occurs again due to the extraction of cryptocurrencies due to high power consumption.

The government said it was having trouble supplying electricity and burning fuel oil to generate enough electricity. In both periods, the Ministry of Energy acknowledges a “surprise” at the peak of electricity consumption; However, the situation of the previous months and years, and of course the statistics and information that can be seen on the website of the Ministry of Energy, make it quite possible to predict the peak consumption of each month.

After being summoned to parliament to answer for the power outage, the Minister of Energy announced:

We analyzed that 9% increase in electricity consumption to cooling devices, 2000 MW to Ramzarz extraction devices, 2000 MW to growth in consumption in large industries and an increase of about one million subscribers per year, and slightly earlier use of agricultural water wells to supply water due to droughts…

Conclusion: Due to the small share of hydropower plants in the country’s electricity production, it is unlikely that the main cause of electricity shortages is heat and reduced rainfall.

How effective is cryptocurrency extraction in blackouts?

The Ministry of Energy said last year that the legal extraction of cryptocurrencies consumes 300 megawatts of electricity. It was said at the time that the same amount of electricity was consumed for illegal mining; This means that a total of 600 MW of electricity is consumed for mining in the country. As the value of cryptocurrencies increased and the use of mining devices expanded, the Ministry of Energy turned to various pricing for mining.

In addition, the use of extraction devices was banned at certain times of the year due to high power consumption.

These measures resulted in nothing but undergrounding the miners’ activities. In fact, those interested in the cryptocurrency mining industry have opted to operate covertly, instead of paying multiple fees to the Ministry of Energy and following strict regulations, as more than 70 percent of the country’s mining is said to be illegal.

As a result, it is now impossible to estimate the amount of cryptocurrency mining in Iran.

If we consider the consumption of 300 to 700 MW of electricity for mining, the share of this industry in the use of electricity in the country is 1%.

Elliptical Blockchain Research Company announced in a report last month that about 4.5 percent of the world’s bitcoin mining is done in Iran. Also, statistics from the University of Cambridge, which continuously calculates the amount of electricity consumed for mining, show that the power consumption of the Bitcoin network worldwide is 13081 MW.

Putting these numbers together, again, Iran’s share of mining power consumption does not exceed 700 MW.

Conclusion: The 1% share of digital currency mining in the country’s electricity consumption should not cause a power shortage crisis. Even if we consider the electricity consumption of extractors twice as much as all domestic and global statistics, this amount should not put pressure on the electricity network and create a critical situation in the face of the country’s annual production capacity of more than 80,000 MW.

What really caused the blackouts?

A few days ago, the Minister of Energy said in the parliament that droughts, lack of water for electricity generation, early increase in temperature, and illegal extraction of ciphers are the reasons for the 25% increase in energy consumption compared to last year. Reza Ardakanian added that we had a reduction in electricity generation capacity of about 3,500 MW, and the early heat caused problems for the power plants.

According to him, 10% of the energy consumption produced by cryptocurrencies in the world belongs to Iran, which means 2,000 MW of electricity; A statistic that is not confirmed by any valid study or statistic.

Meanwhile, activists in the field of cryptocurrencies blame other reasons for the blackouts and believe that the budget of the Ministry of Energy and its announced statistics do not match. Christ  Alawites, members of the Commission and Blockchain Rmzarz computer trade organization, said the loss of electricity and  Bdhkarbvdn Ministry of Energy and Anjamnshdn overhaul power plants, the main reasons for the lack of electricity are not going to be resolved anytime soon.

Energy loss in Iran’s electricity distribution network is ten times more than the energy used to extract ciphers

The country’s very dilapidated electricity distribution network needs to be repaired or equipped with new equipment, which the Ministry of Energy has not paid attention to in recent years; As a result, 7,000 to 8,000 megawatts are wasted annually in Iran’s electricity distribution network; That is about 10 times more than the energy consumed by all extractors in the country.

Not to mention that private power plants generate the most electricity in the country, But the Ministry of Energy owes them 30,000 billion tomans. With the non-payment of power plants, they will not be able to carry out repairs and upgrades and, as a result, increase capacity.

A member of the Nasr Organization’s Cryptography Commission said that several solutions have been put in front of the Ministry of Energy to solve the debt problem; But in recent years, these proposals have not been heeded.

For example, in winter, when peak power consumption is very low, the capacity of ready-to-operate power plants, which are shut down due to the need to generate more electricity, can be used to power the Ramzarz mining farms.

By being located next to power plants, these farms can even reach their end-user without entering the power distribution network and putting pressure on it, and the problem of energy loss can be reduced to zero.

In other examples, some power plants from which the Ministry of Energy no longer makes guaranteed purchases could be sold to power plants and re-operated. However, the Minister of Energy did not sign a guaranteed purchase contract for many of the distributed power plants and declared that the supply of electricity needed by the farms was only allowed from newly established or renewable power plants.

Consumers’ access to the energy exchange has also been curtailed, and by creating a kind of monopoly, miners will not be able to take advantage of this opportunity.

The Ministry of Energy has not specified anywhere exactly what the tariffs for the Ramzarz extraction have been spent and why not even a part of it has been spent to solve the problems of the distribution network.

However, the order to cut off the electricity to the farms, while this area is one of the industries, has caused severe losses to this sector and no one is responsible for these damages.

This is happening at a time when if another legal industry in the country were to suffer, it would not be possible for the active forces in that sector to simply lose their jobs and not even receive unemployment insurance.

This issue must be placed next to another fact, and that is the profitability of cryptocurrency mining in comparison with many different industries in the country, from aluminum and cement to steel and automobile manufacturing.

In fact, the profitability of this industry is not only for the benefit of the extractor, but it also benefits its related industries, such as the electricity industry, and moves the economic wheel of the country.

However, the opposite is happening, and due to grammatical cuts and incorrect pricing, miners are migrating from Iran.

With power outages in recent weeks, we continue to see power outages, and tables of possible blackouts in cities are published daily. Apparently, widespread power outages in other departments and industries have not been able to compensate for the shortage of electricity, and power outages in various areas in the coming days are not at all unexpected.

These events reinforce doubts about the veracity of the statements of the Ministry and the Minister of Energy.

Is wasteful consumption the cause of power shortages and blackouts?

Among the regular suspects in resource cases are the “people” or, more precisely, the “wasteful consumption” of ordinary citizens; But do Iranians consume more electricity than people in other parts of the world?

According to the EIA, Iranians, with a per capita consumption of 350 watts or 3072 kilowatt-hours per capita, are lower than the world average in terms of per capita electricity consumption and are ranked 94th in the world.

This means that Iran’s per capita electricity consumption is three to four times lower than that of developed countries such as Finland, Canada, the United States, and North Korea.

Even countries such as Georgia, Bhutan, and Cyprus, which are not comparable to Iran in terms of energy resources and high-consumption industries, have higher per capita electricity consumption than Iran.

Therefore, it does not seem that the Iranian people and their consumption habits are the main reason for the lack of electricity.

The blackouts are likely to continue for the next few years

The energy situation in Iran is deteriorating day by day, and power outages are likely to continue in the coming years; Because the Ministry of Energy with a debt of more than 60,000 billion tomans, will be handed over to the next minister of the government and the problem of not carrying out periodic repairs of power plants will be faced by the Ministry of Energy of the future government for a long time.

Finally, all the reasons mentioned in this article suggest that the Ministry of Energy is publishing contradictory and inaccurate news to divert public opinion from its mismanagement of electricity generation.