How Iran Uses Bitcoin Mining to Bypass Sanctions

Iran isn’t mining Bitcoin because it’s trendy. It’s doing it because it has to.

Since the U.S. pulled out of the Iran nuclear deal in 2018, the country has been locked out of the global banking system. SWIFT cuts, frozen assets, blocked dollar transactions - it all added up to an economic chokehold. But Iran didn’t sit still. Instead, it turned its cheap electricity and vast natural gas reserves into a digital lifeline: Bitcoin mining.

By 2025, Iran accounted for 4.5% of the world’s total Bitcoin mining power. That’s more than Russia, more than Canada, and rivals entire continents. And it’s not accidental. This isn’t a few hobbyists running rigs in garages. This is a state-backed, industrial-scale operation designed to sidestep sanctions one block at a time.

How Bitcoin Mining Bypasses Sanctions

Sanctions work by cutting off access to traditional finance: banks, wire transfers, credit cards, SWIFT. But Bitcoin doesn’t need any of that. It runs on a decentralized network. You don’t need a bank to send or receive Bitcoin - just an internet connection and a wallet.

Here’s how Iran uses it:

• They mine Bitcoin using surplus electricity - mostly from natural gas plants that would otherwise go unused.
• The mined Bitcoin is sold on international exchanges for stablecoins or other crypto.
• Those crypto assets are then converted into goods, services, or cash through intermediaries in Turkey, the UAE, or Russia.
• No banks. No SWIFT. No U.S. oversight.

Think of it like bartering - but with blockchain. Instead of trading oil for wheat, Iran trades electricity for Bitcoin, then Bitcoin for medicine, food, or machinery. The system works because Bitcoin doesn’t care where you’re from. It only cares if you have the keys.

The Infrastructure: Power, Politics, and Profit

The heart of Iran’s mining operation isn’t in Tehran. It’s in Rafsanjan, Kerman province - a desert city with one of the largest Bitcoin farms in the world: a 175-megawatt facility run by IRGC-linked companies.

These aren’t mom-and-pop operations. They’re massive, government-backed industrial complexes. Some sit on military bases. Others are owned by religious foundations like Astan Quds Razavi, which controls billions in assets and operates with near-total immunity from oversight.

Electricity here costs pennies - sometimes effectively free. Why? Because the government doesn’t charge these mining farms. They’re given priority access to power grids, often at the expense of homes and hospitals. In 2023, reports showed entire neighborhoods in Tehran going dark for hours while mining rigs in the south kept running 24/7.

The hardware? Mostly Chinese-made ASIC miners. But getting them isn’t easy. Sanctions block direct imports. So Iran uses smuggling networks, fake end-user certificates, and shell companies in Malaysia and Turkey to route equipment in. Some miners pay triple the market price just to get a single S19 Pro unit.

By 2024, over 10,000 licensed mining farms were operating across Iran. That’s not counting the unlicensed ones. Estimates suggest the real number is closer to 25,000. And the government? It’s not just tolerating this - it’s encouraging it. In 2022, the Central Bank of Iran officially recognized cryptocurrency as a tool for trade. By 2023, it had licensed 90 domestic crypto exchanges.

The Numbers Don’t Lie

Here’s what the data shows:

• Over $4.18 billion in cryptocurrency flowed out of Iran in 2024 - up 70% from the year before.
• Iran’s mining operations consume roughly the same amount of electricity as 10 million barrels of crude oil per year. That’s 4% of Iran’s total oil exports - but without the sanctions.
• Since 2018, Iranian-linked wallets have processed over $8 billion in transactions on Binance alone.
• The first official Iranian import paid in crypto? A $10 million order of medical equipment in August 2021.

These aren’t small transactions. This is how a country keeps its economy alive when the world says no.

Why Iran’s Strategy Works - And Why It’s Dangerous

Iran’s approach is unique. Other sanctioned nations tried crypto - Venezuela with its Petro, North Korea with its hacks. But those failed. The Petro was worthless. North Korea stole crypto, not mined it.

Iran did something smarter: it mined Bitcoin legally, at scale, and with state backing. It turned a global network designed for decentralization into a national tool for survival.

Here’s why it works:

• Energy advantage: Iran’s electricity costs are 10x lower than in the U.S. or Germany. Miners there pay less than $0.005 per kWh. In Texas? $0.06.
• State protection: IRGC-linked farms don’t get shut down. They get power lines.
• Global demand: Bitcoin is liquid. You can sell it anywhere. You can’t sell oil if you can’t get paid.

But it’s not without risk.

• Power shortages: Mining is draining the grid. In 2024, winter blackouts hit 12 cities. People froze. Hospitals lost backup power.
• Equipment shortages: Sanctions make it hard to upgrade hardware. Many rigs are outdated, inefficient, and breaking down.
• International pressure: The U.S. Treasury and EU regulators now flag any Bitcoin transaction that passes through Iranian mining pools. Exchanges like Coinbase and Kraken block Iranian IPs. Chainalysis and Elliptic track these flows.
• Funding the IRGC: A 2025 FinCEN report linked over $1.2 billion in Iranian crypto proceeds directly to IRGC-linked entities. That includes funding for Hezbollah, Houthi rebels, and missile programs.

So while Iran gains access to foreign currency, it also deepens its isolation - and fuels global instability.

Who Really Benefits?

This isn’t a national project. It’s a regime project.

The average Iranian citizen doesn’t profit from Bitcoin mining. They don’t own rigs. They don’t get paid in crypto. They pay higher electricity bills and endure rolling blackouts.

The real winners? The IRGC. The religious foundations. The state-owned energy conglomerates. And the Chinese and Russian companies that supply the hardware and help launder the proceeds.

On Telegram channels in Persian, ordinary Iranians complain about the power cuts. On Twitter, Iranian crypto traders brag about their profits. But the gap between the two is huge. The system isn’t designed to help the people. It’s designed to help the state survive.

The Bigger Picture: What This Means for the World

Iran’s Bitcoin mining strategy isn’t just a workaround - it’s a warning.

It shows that financial sanctions, once seen as ironclad, are becoming obsolete in a world of decentralized networks. You can freeze a bank account. You can’t freeze a blockchain.

Other nations are watching. Venezuela is experimenting again. Russia is expanding its mining footprint. Even Belarus and Syria are exploring similar models.

For the first time, a country isn’t just evading sanctions - it’s building a parallel economy on top of Bitcoin’s infrastructure. And it’s working.

The challenge for the West? How do you stop something that doesn’t belong to anyone? How do you sanction a network that runs on code, not borders?

Right now, the answer is: you can’t - not completely. But you can make it harder. By tracking wallets. By pressuring exchanges. By cutting off access to hardware. And by recognizing that Bitcoin, for all its ideals, is now being used as a weapon.

What’s Next?

Iran plans to double its mining capacity by 2027. It’s building new data centers in Bushehr and Khuzestan. It’s negotiating crypto partnerships with Russia, China, and even some EU countries.

Meanwhile, global regulators are scrambling. The U.S. Treasury is pushing for mandatory blockchain analytics. The FATF is drafting new rules for crypto exchanges. The EU is considering a “sanctions compliance” flag on all crypto transactions.

But here’s the truth: as long as Iran has cheap power and global demand for Bitcoin, it will keep mining. The question isn’t whether this strategy will end. It’s whether the world is ready to adapt - or if it’s still clinging to a financial system that no longer works.