Natural Gas Price Hike Hits Crypto Miners in Iran

Companies using natural gas as a power source to mint digital currency in Iran will have to deal with a sharp increase in the price of the fuel. The new rates set by the state-run supplier are almost double the previous and have been imposed retroactively, local media reported.

The National Iranian Gas Company, an enterprise under the Ministry of Petroleum of the Islamic Republic, has informed cryptocurrency miners about a raise of natural gas rates, the English-language daily Financial Tribune announced, quoting a report by Peyvast Magazine.

According to the publication, the increase is retroactive and covers the current fiscal year, which started in March 2022. This means that the bills for the past six months will be adjusted in accordance with the new tariffs.

As a result of the decision made by the oil ministry, a cubic meter of the fuel will now cost 53,368 rials (around $1.25) which is almost twice the price of 29,440 rials that miners used to pay before, Peyvast noted. On top of that, 9% value added tax (VAT) is also due.

Abbas Ashtiani, the chief executive officer of the Iran Blockchain Association, described the move as a violation. He is convinced that the hike should not have applied to gas consumption during the first half of the fiscal year.

Over a third of the crypto farms in the country rely on gas supplies and many of the licensed firms will suffer heavy losses. The local crypto community believes that after internet disruptions and legal procedures, this is another wrong policy that will push more miners underground.

Iran miners have been partially blamed for the country’s energy deficit and were forced to shut down on number of occasions in the past two years. Authorized mining farms pay for their electricity at export rates and the price of gas is set at around 70% of the export average.

Global gas prices surged after Russia launched its invasion of Ukraine in late February but they have declined recently, due to the mild fall and rising reserves in Europe. Ashtiani noted that Iranian gas tariffs are usually adjusted when global rates increase but not when they decrease.

Do you think Iranian miners depending on natural gas supplies will survive the current price hike? Share your thoughts on the subject in the comments section below.