Crypto Crusade in Iran: Elizabeth Warren Claims Bitcoin Mining in Iran Is Used for Terrorism

Bittime - Crypto crusade in Iran, Elizabeth Warren claims Bitcoin mining in Iran is used to fund terrorist activities.

This news certainly surprised many people, even though it was just a claim and not necessarily proven. However, until now there has been no clarification from the Iranian side.

Crypto Mining in Iran Threatens US

Senators Elizabeth Warren and Angus King stated that the Iranian government has used funds from crypto mining to fund terrorist organizations. 

According to US Senator Elizabeth Warren, she is once again warning about the dangers of cryptocurrencies, this time highlighting cryptocurrency mining operations in Iran that she claims are financing Hamas and other terrorist groups around the world.

Based on these claims, it could be said that a Crypto Crusade is taking place in Iran, according to Elizabeth Warren and Angus King.

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An Open Letter

In an open letter sent on May 1 to National Security Advisor Jake Sullivan, Defense Secretary Lloyd Austin, and Treasury Secretary Janet Yellen, the two asked the Biden administration to provide information about possible ties between the Iranian government and local crypto miners, as well as how digital assets can be used to evade US sanctions. 

According to Senators Warren and King, Iran has utilized funds from crypto mining activities to fund terrorist organizations as well as the country's April attack on Israel.

“Iran's use of crypto to evade sanctions is a direct threat to our national security,” the letter said. 

“Iran's military has used crypto to fund notorious terrorist groups such as Hezbollah, the organization believed to be partly responsible for the January 2024 drone attack in Jordan that killed three members of the US military [...] Unless we take action, Iran will continue to do so . Using crypto to fund attacks on Israel.”

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Claim Bitcoin Mining in Iran for Terrorism

Source: https://cryptoslate.com/

In 2019, Iran legalized the crypto mining industry, according to writings from Warren and King. 

In those five years, Iran collected millions of dollars through crypto mining activities , which became a source of income used for various purposes such as purchasing imported goods, transferring funds domestically and internationally, as well as funding Hamas and other terrorist organizations.

The senators warned that the Iranian government's activities constitute a threat to national security.

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The letter also cited an International Monetary Fund (IMF) report in April 2022 which stated that mining energy-intensive blockchains like Bitcoin could allow countries to monetize energy resources that cannot be exported due to sanctions.

In addition, Warren and King also referred to a February 2024 Chainalysis report which stated that more than three percent of total inflows to Iranian crypto exchanges, and more than 29% of total Bitcoin inflows are estimated to come from these crypto mining activities.

Iran's Hot-Cold Relationship with Crypto

According to a recent report comparing crypto asset adoption worldwide, Tehran, the capital of Iran, ranked 17th, surpassing cities usually associated with crypto assets such as Australia and Japan.

Crypto-related activities in Iran include everything from mining, trading, developing new tokens, blockchain projects and NFTs on the consumer side, to developing central bank digital currencies ( CBDC ) and foreign trade payments on the government side.

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However, the country still does not have adequate regulations for virtual asset service providers (VASP), leading to increasing cases of crypto fraud and other malicious activities.

Although not legally prohibited in Iran, crypto assets are not allowed to be used as a substitute for Iranian Rial (IRR)/Toman for domestic transactions.

However, practically this is not very significant as we found that businesses in Tehran and other major cities accept crypto as a form of payment. 

Iranians also use crypto assets for cross-border payments and remittances, considering that international payment systems are very limited in Iran.

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Crypto Mining in Iran

With its rich natural resources and affordable electricity costs, the mining industry offers promising prospects in Iran. 

Iran hosts about 4.5% of total global Bitcoin mining, generating hundreds of millions of dollars. 

In 2019, Iran officially recognized mining activities and in 2022 introduced official permit requirements.

The government benefits from selling electricity at higher prices to miners, giving them tax exemptions, and even using mining assets to pay for imports.

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However, the relationship between miners and the government is less than harmonious. During peak electricity demand, the government can stop supplying electricity to mines. 

Crackdowns are also often taken against miners deemed to be operating 'illegally', especially if using unofficial or subsidized electricity, although other reasons may include the imposition of additional taxes by the government.

Given these factors, mining activity in Iran is often unstable, and monthly market share can experience a drastic drop from 4.5% to just 0.12% in a few months.

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