Beyond Islamic teachings, Iran needs Bitcoin

Author: Zen, PANews

The global spotlight is on Iran and the Persian Gulf. The outside world often discusses Iran through two main narratives: military and regime risks, and energy and shipping disruptions. Mainstream media’s immediate reports focus on military actions, oil and gas facilities, the Strait of Hormuz, and sharp fluctuations in financial markets.

But beneath these grand narratives, if we zoom in on cities like Tehran, Mashhad, and Ahvaz, and look at ordinary people, you’ll find that during times of heightened tension, the most important concerns are protecting lives and assets.

After the US and Israel launched attacks, outflows from Iran’s largest cryptocurrency exchange Nobitex surged—about 700% in just a few minutes. Chainalysis also confirmed that within hours of the attack, the hourly trading volume of crypto assets inside Iran rapidly increased.

In just four days up to March 2, over ten million dollars worth of crypto assets accelerated out of Iran. Iranian citizens are moving their funds into cryptocurrencies as a safer channel.

The U.S. Dollar’s “Dominance” in Iran’s Economy

For Iran, any escalation in Middle East tensions quickly impacts the fragile exchange rates and financial systems. Surprisingly, cryptocurrencies have become an important medium in this context.

Over the past few years, Iran’s economy has been trapped in a cycle of sanctions, internal imbalance, and currency devaluation. The persistent weakening of the rial is no longer just a matter of prices—it has become a nationwide social panic.

In 2015, after the Iran nuclear deal (JCPOA), markets briefly expected sanctions relief: the free market rate was roughly 1 USD to 32,000 rials. But after the US withdrew from JCPOA in 2018 and announced phased sanctions reinstatement, the rial-to-USD exchange rate quickly jumped into the “100,000 rials era.” Long-term sanctions, inflation, foreign exchange shortages, and regional conflicts caused the rial to fall below 1 million in the first half of last year. During protests earlier this year, it plummeted to a record low of 1.5 million rials.

In a global financial system centered on the US dollar, Iran—sanctioned and “cut off”—must face a dollar-dominated, continuously devaluing rial environment.

The US dollar, as the “hub currency” of global forex trading, enables stable, low-friction cross-border transactions for imports, debt payments, insurance, shipping, and key component procurement. Even with Iran’s printing presses running full blast, issuing more rials internally cannot replace this critical capability.

In many commodity and supply chain pricing systems, the dollar remains the natural anchor. Under sanctions, Iran finds it harder to access dollar clearing services through normal banking channels, making hard currencies scarce and expensive.

Therefore, many Iranians expect to quickly convert their rials into more reliable assets—mainly US dollars, gold, and cryptocurrencies like Bitcoin and USDT stablecoins.

As an Islamic country, Iran’s financial activities must comply with Sharia law. Islamic teachings prohibit all forms of usury (riba) and gambling (gharar). Cryptocurrency trading, with its volatility and speculative nature, is viewed cautiously.

However, Iran’s former Supreme Leader Khamenei has shown a relatively open attitude toward cryptocurrencies, calling for Sharia to adapt with the times. His statements are essentially pragmatic compromises in the face of economic desperation.

From government to civilians, Iran needs cryptocurrencies

Due to long-term sanctions and high inflation, both the government and the people are seeking hard currency substitutes in their own ways. This is why crypto assets, represented by Bitcoin and stablecoins, are gradually shifting from “speculative assets” to essential value tools in Iran. They serve as a financial safety valve for citizens and a “cyber bank” for the state to evade sanctions.

Iran’s official stance on cryptocurrencies is a mix of “love and hate”—utilization and repression.

At the national level, when crypto activities help facilitate import settlements, access to foreign exchange, or fund transfers, the government tolerates or even embraces them within limits—such as early domestic Bitcoin mining. Cryptocurrencies are also a “shadow financial network” used by Iran’s government and military to transfer funds and evade regulation.

According to TRM Labs, over 5,000 addresses linked to the Iranian Islamic Revolutionary Guard Corps (IRGC) have been identified, with an estimated transfer of $3 billion worth of crypto since 2023. British blockchain research firm Elliptic reports that Iran’s central bank has at least $507 million in USDT stablecoins as of 2025.

But when cryptocurrencies are seen as accelerating rial devaluation, fueling capital flight, or creating unregulated civilian financial networks, the government quickly tightens controls.

In early 2025, Iran’s central bank abruptly “cut off all rial payment channels for crypto exchanges,” preventing over 10 million users from using rials to buy Bitcoin and other assets. Reports suggest one goal was to prevent further rial devaluation and avoid the currency being rapidly exchanged for foreign currencies or stablecoins through exchanges.

This move to block fiat currency entry essentially uses administrative measures to cut off the most convenient channels for civilians to convert rials into value. But it doesn’t mean society no longer needs crypto; instead, demand shifts to more gray, decentralized routes—over-the-counter trades, alternative payment accounts, or covert on-chain transfers.

Repeated government crackdowns during currency crises tend to reinforce ordinary people’s preference for “off-system assets.” Every sudden restriction reminds them that financial rules can change at any time, and assets are not fully under personal control.

On the citizen level, crypto demand is driven by three main factors: preservation of value, transferability, and speculation. TRM Labs estimates that 95% of crypto-related fund flows in Iran come from retail investors. Nobitex, Iran’s largest exchange, reports 11 million customers, mostly retail and small investors. The exchange states: “For many users, cryptocurrencies mainly serve as a store of value to cope with the ongoing devaluation of the national currency.”

More fantastically, in mid-2024, Iran saw a nationwide craze over Telegram-based “Tap-to-Earn” crypto mini-games like Hamster Kombat and Notcoin. On Tehran’s metro and streets, countless Iranians frantically tapped their screens, trying to fight soaring prices through free “airdrops.” Reports say nearly a quarter of Iran’s population participated. When the national currency loses credibility, even a small hope of earning virtual coins by tapping screens becomes a faint glimmer in the darkness.

Thus, a paradox emerges: authorities worry that cryptocurrencies accelerate rial devaluation and weaken capital controls, so they cut off rial payment channels at critical moments; yet, in the long-term sanctions and foreign exchange shortages, crypto’s usability keeps proving itself. For ordinary Iranians, this usability is crucial—an emergency escape in times of crisis.

The covert war over electricity and the rising number of “black miners”

Unlike front-line conflicts involving weapons, Iran has long been engaged in a silent underground war over electricity resources.

In a country with “scarce social resources,” electricity is no longer just a necessity but a strategic resource that can be exploited for arbitrage. The cost is borne by ordinary residents, causing severe power shortages.

Despite being rich in energy resources, Iran has long suffered from power shortages and rolling blackouts. The main reasons are underinvestment in infrastructure, aging generation and transmission systems, and demand surges driven by subsidies.

In summer 2025, Iran’s Tavanir electricity company publicly stated that crypto mining consumed nearly 2,000 MW—about the output of two Bushehr nuclear reactors. Mining accounts for roughly 5% of total electricity use but may represent 15–20% of the current power shortfall.

Tavanir also reported that during an internet outage related to conflict with Israel, national electricity demand dropped by about 2,400 MW; they partly attributed this to the offline status of large numbers of illegal miners, with around 900,000 illegal devices shut down—indirect evidence of a large underground mining industry.

The CEO of Tehran Province’s power distribution company said Iran has become the world’s fourth-largest crypto mining hub, with over 95% of active miners operating illegally—making it a “paradise for illegal miners.” This shifts responsibility from the government to ordinary citizens.

Despite recent crackdowns on illegal mining, the phenomenon has only grown. Illegal mining has shifted from fringe activity to a structural industry, driven not only by electricity arbitrage but also gray protection, law enforcement rent-seeking, and complex local interests—deeply entrenching privilege.

Religious sites and military-controlled industrial zones often enjoy free or heavily subsidized power.

“Ordinary citizens and private enterprises cannot access the amount of electricity needed to run and cool such large-scale mining operations,” say industry insiders. Multiple reports reveal that elites dominate this “power feast.” Religious sites like mosques, legally entitled to extremely cheap or free electricity, have become underground mining farms.

Similarly, military industrial zones and secret facilities often hide massive mining operations. When privileged groups exploit free “state electricity” to mine Bitcoin, ordinary residents, suffering from high inflation, find it impossible even to keep fans running during hot summer nights.

Ultimately, Iran’s power crisis and illegal mining are not just security issues but a struggle over subsidized resources, currency devaluation, and survival pressures. Power outages leave a lasting impact on ordinary families’ summer nights.

Amid ongoing geopolitical conflicts and political instability, Iran’s economic future remains shrouded in uncertainty.