State-Controlled Crypto Mining in Iran: How the Regime Uses Bitcoin to Bypass Sanctions

Iran’s Crypto Mining Machine: Power, Politics, and Profit

When the lights go out in Tehran during a 45°C summer heatwave, thousands of families sweat through blackouts. Meanwhile, just miles away, a hidden facility buried beneath a sports complex is running 24/7-thousands of Bitcoin miners humming, consuming electricity at a rate that could power a small city. This isn’t illegal activity in the usual sense. It’s state-sanctioned. And it’s one of the most striking examples of how a government turns digital currency into a tool of survival.

How It All Started: A Legal Loophole for Survival

In 2018, Iran’s government did something unexpected: it made cryptocurrency mining legal. Not because it believed in decentralization, but because it had no choice. U.S. sanctions had frozen Iran out of global banking. Foreign currency was nearly impossible to access. Imports of medicine, spare parts, even food were getting harder. The Central Bank of Iran saw crypto mining as a way to generate hard currency without touching the international financial system.

By 2020, Iranians were trading between $16 million and $20 million in crypto daily. Bitcoin mining alone was worth about $1 billion a year. The government didn’t stop it-they watched it, then took control.

The IRGC’s Hidden Mines: Electricity as a Weapon

The real power behind Iran’s crypto boom isn’t tech startups or individual miners. It’s the Islamic Revolutionary Guard Corps (IRGC). With direct access to military-grade infrastructure and subsidized electricity, the IRGC built massive mining farms across the country. One of the most notorious is the 175-megawatt facility in Rafsanjan, built with Chinese equipment and running on electricity that costs just 0.004 cents per kilowatt-hour. That’s less than 1/50th of what businesses pay in the U.S. or Europe.

These aren’t just data centers. They’re energy theft operations disguised as national projects. Mining rigs are installed in tunnels under sports complexes, inside abandoned factories, and even on military bases with dedicated power lines. In Ahvaz, a 16-hectare cycling arena was found to house thousands of ASIC miners hidden beneath the track and in electrical rooms-operating undetected for over two years.

The result? Widespread blackouts. In 2024, citizens took to Twitter with #IranEnergyCrisis, posting videos of their homes without power while mining operations nearby ran uninterrupted. One verified account reported a 14-hour blackout in Tehran’s District 3 during peak heat-while the IRGC’s rigs kept mining.

Legal vs. Illegal: A Game of Two Rules

Iran’s government claims to regulate crypto mining. Since 2025, operators need a license from the Ministry of Industry, Mine and Trade. They’re supposed to use government-approved hardware, pay 7 cents per kWh, and report their profits. Sounds fair-until you realize the rules don’t apply to everyone.

IRGC-linked operations, religious foundations like Astan Quds Razavi, and state-owned enterprises operate with total immunity. They get electricity at 0.004 cents. They don’t pay taxes. They don’t need licenses. They’re protected by armed guards. Meanwhile, private miners face delays of 6-8 weeks just to get a license, and their machines are forced to use less efficient, government-approved hardware that cuts profits by 15-20%.

This isn’t regulation. It’s a cartel. The state controls the market by letting its allies take everything while squeezing everyone else.

Sanctions Evasion: Crypto as a Lifeline

Iran’s real goal isn’t to become a crypto superpower. It’s to bypass sanctions. By mining Bitcoin and converting it to stablecoins like USDT, the regime can buy goods on the black market without touching banks. No SWIFT. No audits. No paper trail.

But the world is catching on. In July 2025, Tether-the company behind USDT-froze 42 Iranian-linked cryptocurrency addresses. It was the largest single freeze in Tether’s history. The wallets were tied to Nobitex, Iran’s biggest domestic exchange, and IRGC-affiliated wallets flagged by Israeli counterterrorism analysts.

The freeze didn’t stop Iran. It forced a shift. Within days, the government urged citizens and businesses to move their holdings from USDT to DAI, a decentralized stablecoin on the Polygon network. Why? Because DAI is harder to freeze. It’s not controlled by a single company. It’s code. And code, unlike banks, can’t be shut down by a U.S. executive order.

The Rial Digital: The Government’s Countermove

While the IRGC mines Bitcoin, the Central Bank of Iran is quietly building its own digital currency: the Rial Digital. Officially, it’s described as “the electronic version of common banknotes.” In reality, it’s a surveillance tool. Every transaction is tracked. Every wallet is tied to your ID. Every purchase can be monitored.

The goal? Replace decentralized crypto with state-controlled crypto. If citizens can’t use Bitcoin to buy medicine from Turkey, maybe they’ll use the Rial Digital instead. And if they do, the government gets full visibility into their spending habits.

This is the ultimate contradiction: the same regime that protects mining for sanctions evasion is trying to ban its own people from using the same technology.

What’s Next? Tax, Control, or Collapse?

In August 2025, Iran passed the Law on Taxation of Speculation and Profiteering. For the first time, crypto profits are taxed-like gold, real estate, and forex. The government is now trying to collect billions in unpaid taxes from exchanges that operated in the shadows for years.

But here’s the problem: the people who made the money-the IRGC and its allies-still don’t pay taxes. The tax law targets small traders and legal operators, not the ones who stole the power.

Energy experts warn that Iran’s grid can’t handle this much demand. Mining consumes over 1,000 megawatts of electricity nationwide. That’s enough to power millions of homes. The country already imports electricity from neighbors like Iraq and Azerbaijan. If the grid collapses, it won’t be because of drought or mismanagement. It’ll be because a handful of state-linked entities turned electricity into a cash machine.

Public Outrage and the Cost of Silence

Iranians know what’s happening. Reddit threads in r/Iran have thousands of comments from people describing factories shutting down because of power cuts, while mining farms in the same city kept running. Social media is full of anger: “They take our electricity to buy weapons. We can’t even run a fan.”

But speaking out is dangerous. The government has banned all crypto advertising-online and offline. Journalists who investigate mining operations disappear. Whistleblowers are silenced.

The real cost of state-controlled crypto mining isn’t just in kilowatts. It’s in trust. It’s in the dignity of a population forced to choose between staying warm and staying connected.

Final Reality: A System Built to Break

Iran’s state-controlled crypto mining isn’t a success story. It’s a desperate gamble. The regime uses it to survive sanctions, but it’s killing its own economy in the process. The energy grid is crumbling. Public anger is rising. International pressure is tightening. Even the stablecoins they rely on are being frozen.

There’s no long-term win here. Either the government shuts down the IRGC’s mines-and risks losing its main source of hard currency-or it lets them keep running, and the country burns out from the inside.

Right now, it’s choosing the burn.