Bitcoin

Bitcoin and blackouts fuel anti-Chinese sentiment in Iran

Some Iranians do not seem to be very keen on China and its nationals. There are a wide range of possible reasons, from the cheap and mostly low-quality Chinese products once imported to Iran and their devastating impact on the businesses of local Iranian producers to the Chinese fishing trawlers ruining the livelihoods of local fishermen in southern Iran.

The COVID-19 pandemic, which originally broke out in China, was the last nail in the coffin, and increased unfavorable views of China to historic highs in Iran, as in almost all other parts of the world. But few people would have guessed the latest reason for Sinophobia in Iran: bitcoin.

In recent weeks, Iranian power plants have been forced to switch to burning low-grade fuel oil to generate power because a sharp rise in the country’s domestic consumption has led to natural gas shortages. This severely increased air pollution in Tehran and other megacities, increasing public anger toward the government.

Several plants were later shut down after the government ordered a temporary ban on the use of low-grade fuel oil after pollution increased to dangerous levels. However, that resulted in blackouts in various cities, including Tehran.

Already suffering from economic woes and price hikes caused by the U.S. sanctions and government mismanagement, the COVID-19 pandemic, the severe air pollution and now the blackouts, many people were outraged to learn that the Chinese are supposedly devouring the country’s electricity in their bitcoin mining farms, especially a big one in the city of Rafsanjan in Kerman province, southeast of Iran.

Bitcoin mining is the process of verifying bitcoin transactions for the reward of the cryptocurrency — it requires a large amount of computing power, and thus electricity.

“Social media do their job. [Now] the majority of people are informed that the blackouts are caused by China’s bitcoin mining,” an Iranian user said on Twitter, posting her tweet with the hashtag #ChinaLiedMillionsDied.

The anti-Chinese sentiments gradually reached boiling point, and many Iranians took to social media to angrily criticize the government for its failure to meet the people’s basic need for electricity while “giving away” the country’s power to Beijing.

“When we said we are China’s colony, some people felt offended. Now you can see all these bitcoin mining farms. Because of that, you neither have power nor business,” a user tweeted, using the hashtag #Communist_China.

“We thought Iran is no longer an ‘orphanage.’ Now the Chinese are using Iran’s electricity to mine bitcoin, and have literally destroyed our local fishing in the Persian Gulf with their fishing trawlers. Those who once wore shrouds to protest against capitulation have now gifted the country to China,” Iranian political commentator Ehsan Soltani said in a tweet, which he posted along with a video of the Chinese mining farms in Iran.

“China comes to Iran to mine bitcoin, each of which is worth $40,000; then we [Iranians] have to wear warm clothes in a dark house while we are breathing mazut (fuel oil). Isn’t that beautiful?” said a user on Twitter, complaining about the severe air pollution in Iranian megacities, which has been mainly caused by the use of low-quality fuel oil in power plants.

Another user sarcastically pointed to the Iranian government’s call for less energy consumption in both cold and hot seasons, writing, “Consume less electricity in winter so that our Chinese Communist brothers would be able to mine bitcoin, and consume less electricity in summer so that our Iraqi brothers would experience no power cuts. Apparently only we Iranians are redundant in Iran.”

“There’s a power cut in our company now, and … because of China’s damn bitcoin mining I’ll have to work extra hours today,” said another user.

A user even went beyond that and expressed his anti-Chinese sentiments with a racist tweet: “I don’t care if I’m called a racist. But now I hate any person with monolid eyes, and I’m going to support hatemongering against them as far as I can.”

Majid-Reza Hariri, the head of Iran-China Joint Chamber of Commerce, believes the rumors about the power shortage are being spread by those who are against the expansion of Tehran-Beijing trade relations and use any challenge and incident to blame China for Iran’s problems.

“It’s far from reality that certain groups try to point the fingers at China whenever something happens in Iran by launching massive campaigns. When people are experiencing blackouts, and suddenly a strange video is released of the infrastructure of a Chinese company to make a fuss about the issue, it shows that a particular group is trying to deal a blow to these bilateral collaborations,” Hariri told the semi-official news agency ISNA.

He said the Chinese miners have obtained all the official permissions and licenses and are indeed importing Iranian electricity. “Giving power to bitcoin mining farms is a form of electricity export, as the government is charging [the Chinese] based on international rates, earning an acceptable profit from this cooperation.”

The photo of a power bill with an extremely huge price tag, issued for a customer named “Iran and China Investment Company,” has gone viral in recent days. The power bill, which apparently belongs to the Rafsanjan mining farm operated by the Chinese, indicates that the miners have used 58,615,905 kWh of electricity in one month, for which they have to pay over 270 billion rials (some $1.2 million).

The revenues seem to be life-saving for the Iranian government whose exports have been severely hit by the U.S. sanctions. However, charity begins at home, or as a similar Iranian proverb says, you should “never kill the lights at home to light up the mosque.”

Faced with widespread protests, especially on social media, the government finally announced on Jan. 14 that it has halted its supply of electricity to all cryptocurrency mining farms, including the ones operated by the Chinese, for two weeks in a bid to prevent further blackouts.

That has so far worked, and Iranians have not experienced further power cuts. But were the blackouts really caused by the Chinese bitcoin mining in the first place?

Iran’s Minister of Communications and Information Technology Mohammad-Javad Azari Jahromi says the total power consumption of legal and illegal bitcoin mining farms across the country is estimated to be around 515 MW.

In the first full week of January, Iran’s electricity consumption hit the record-high level of 40,000 MW. So the electricity used by the Chinese bitcoin farmers is a tiny fraction of the country’s total power consumption, and does not seem to be significant at all.

The Iranian government appears to have calmed down the public dissatisfaction for now, but it must look for the real causes and driving forces of such anti-Chinese sentiments, especially considering its plans for long-term strategic cooperation with Beijing.

If the Islamic Republic wants its Sinophilic “Look East” strategy to work, it first needs to convince the frustrated population it rules over that the country’s national interests would be better served through strategic ties with China, not Europe and the United States.

Reza Khaasteh is a Tehran-based journalist. ©The Diplomat, 20201.

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