Illegal bitcoin miners accounted for 85% of cryptocurrency based activity in Iran: Report

Bitcoin mining funneled more than $186 million into Iranian based cryptocurrency services between 2015 and 2021, as per a Chainalysis crypto crime report. The report stated that illegal bitcoin miners accounted for around 85% of the cryptocurrency activity in Iran, which was also confirmed by the Iranian president. 

Insights from the report stated that many exchanges, which operated in jurisdictions without sanctions, continued to provide financial services to Iranian businesses. In 2021, services outside Iran received $1.16 billion from Iranian services which was double the value received in 2020. Between January 1 and December 31 of 2021, outflows from cryptocurrency mining pools to Iranian services averaged at $343,000 worth of cryptocurrency per day, of which, bitcoin based transactions accounted for around 80%. 

According to the report, the United States Treasury’s Office of Foreign Assets Control (OFAC) stated that United States based businesses and individuals are banned from having transactions with Iranian businesses which included its financial institutions and its central bank. In theory, USA based businesses could have faced penalties or criminal prosecution if they were found in violation of OFAC sanctions. Iran is fueled with the facility of having low-cost electricity to mine cryptocurrencies like bitcoin in a cost effective manner. In 2019, Iranian government created a licensing regime for cryptocurrency mining and in March 2021, a think tank associated with the Iranian president’s office emphasised on the regime’s benefits through a report. 

Chainalysis Know Your Transaction (KYT), which is Chainalysis’ cryptocurrency compliance software, allows businesses to monitor for transactional exposure to Iranian entities while government agencies can identify these kind of transactions counterparties’ using the Chainalysis Reactor, which provides knowledge on blockchain based transactions.

(With insights from the Chainalysis Crypto Crime Report, 2022)