Author: Zen, PANews
The world's spotlight is on Iran and the Persian Gulf. When the outside world talks about Iran, it often revolves around two narratives: military and regime risks, and energy and shipping disruptions. Mainstream media coverage focuses on military operations, oil and gas facilities, the Strait of Hormuz, and the dramatic fluctuations in financial markets.
But beneath these grand narratives, if you zoom in on the ordinary people in cities like Tehran, Mashhad, and Ahvaz, you'll find that in times of heightened tension, protecting life and assets is paramount.
Following the US-Israeli attacks, asset outflows from Nobitex, Iran's largest cryptocurrency exchange, surged by approximately 700% in just a few minutes. A Chainalysis report also confirmed that hourly trading volumes of crypto assets within Iran rapidly increased in the hours following the attacks.
In the four days leading up to March 2nd, over ten million US dollars worth of crypto assets have flowed out of Iran at an accelerated pace. Iranian citizens' funds are being channeled through cryptocurrencies to a safer route.
Iranian Economy Under the Dominance of the US Dollar
For Iran, any escalation of tensions in the Middle East will quickly impact the two fragile nerves of exchange rates and the financial system, and cryptocurrency has unexpectedly become an important medium.
Over the past few years, the Iranian economy has become increasingly mired in a cycle of external sanctions, internal imbalances, and currency devaluation. The continued weakening of the Iranian rial has long since become more than just a price fluctuation; it has also fostered a sense of widespread social panic.
In 2015, after the Iran nuclear deal (JCPOA) was reached, the market initially expected a reduction in sanctions: at that time, the free market exchange rate was roughly 32,000 riyals to the US dollar. However, since the US withdrew from the JCPOA in 2018 and announced the phased reinstatement of sanctions, the riyal quickly fell from tens of thousands to the "hundred thousand riyals era" against the US dollar. Subsequently, the prolonged sanctions, coupled with inflation, tight foreign exchange supply, and geopolitical conflicts, caused the riyal to fall below the million riyal mark in the first half of last year. At the beginning of this year, when protests surged, it even fell to a historic low of 1.5 million riyals.
In a global financial structure centered on the US dollar, Iran, which is being "strangled" by sanctions, has no choice but to face a situation dominated by the US dollar and with the rial continuously depreciating.
As the "hub currency" for global foreign exchange transactions, the US dollar enables stable and low-friction cross-border transactions such as imports, debt, insurance, shipping, and the procurement of key components. Even if Iran's printing presses were running at full speed and it issued countless rials domestically, it could not replace this crucial capability.
In many commodity and supply chain pricing systems, the US dollar remains the natural pricing anchor; in a sanctioned environment, it is even more difficult for Iran to obtain US dollar clearing services through normal banking channels, making the entry of hard currency scarce and expensive.
Therefore, many people expect to exchange their riyals for something more reliable as soon as possible—US dollar cash, gold, and cryptocurrencies such as stablecoins like Bitcoin and USDT.
As an Islamic country, financial activities must also comply with Sharia law. Islamic doctrine strictly prohibits all forms of usury (Riba) and gambling (Gharar), and cryptocurrency trading, due to its high volatility and speculative nature, is also subject to these restrictions.
However, Iran's former Supreme Leader Khamenei held a relatively open attitude towards encryption and called for Sharia law to be updated to reflect the times. Khamenei's statement, in essence, resembled a pragmatic compromise made in the face of economic hardship.
From the government to the general public, Iran needs cryptocurrency.
Due to prolonged sanctions and high inflation, both the Iranian government and its citizens are seeking alternatives to hard currency in their own ways. This is why crypto assets, represented by Bitcoin and stablecoins, have gradually transformed from "speculative commodities" into near-essential value tools in Iran. They serve as both a financial safety valve for citizens and a "cyber bank" for the state apparatus to circumvent sanctions.
The Iranian government's attitude towards cryptocurrencies can be described as "a love-hate relationship, with both utilization and suppression occurring simultaneously."
At the national level, when crypto activities help provide alternative channels for import settlement, foreign exchange acquisition, or fund transfer, the country's regulators may tolerate or even absorb them to a certain extent, as exemplified by the early opening of Bitcoin mining domestically. Cryptocurrencies are also an important tool in the Iranian government and military's "shadow financial network," used to transfer funds and evade regulation.
According to TRM Labs, the company has identified more than 5,000 addresses tagged with the Iranian Islamic Revolutionary Guard Corps (IRGC) and estimates that the organization has transferred $3 billion worth of cryptocurrency since 2023. UK-based blockchain research firm Elliptic stated that the Central Bank of Iran acquired at least $507 million worth of the stablecoin USDT in 2025.
However, when cryptocurrencies are seen as accelerating the devaluation of the rial, reinforcing expectations of capital flight, or forming unregulated informal financial networks, the Iranian government quickly shifts to tightening controls.
In early 2025, the Central Bank of Iran (CBI) "suddenly suspended rial payment channels on all crypto exchage," preventing more than 10 million cryptocurrency users from using rials to purchase crypto assets such as Bitcoin. The report pointed out that one of its main objectives was to prevent further depreciation of the rial and avoid the local currency from being quickly exchanged for foreign currencies or stablecoins through exchanges.
This practice of cutting off the entry point for fiat currency essentially uses administrative means to sever the most convenient channel for the public to convert rials into value. However, it does not mean that Iranian society no longer needs encryption; on the contrary, it will squeeze demand into grayer, more decentralized paths, including over-the-counter transactions, alternative payment accounts, or more covert on-chain transfers.
When a country repeatedly uses this governance approach during a currency crisis, ordinary people's preference for "extra-system assets" is further reinforced. This is because each sudden restriction serves as a reminder that financial rules can change at any time, and assets are not entirely under individual control.
At the citizen level, demand for crypto is primarily driven by three forces: value preservation, transferability, and speculation. TRM Labs estimates that 95% of funds flowing into Iran originate from retail investors. Nobitex, Iran's largest cryptocurrency exchange, disclosed that it has 11 million customers, with the majority of trading activity coming from retail and small-scale investors. The exchange stated, "For many users, cryptocurrencies primarily serve as a store of value to hedge against the continued depreciation of the local currency."
Even more surreal was the phenomenon in mid-2024 when Telegram's "Tap-to-Earn" crypto games, such as *Hamster Kombat* and *Notcoin*, sparked a nationwide frenzy in Iran. On the Tehran metro and streets, countless Iranians frantically tapped their phone screens, attempting to combat soaring prices with free "crypto airdrops." Reports indicated that nearly a quarter of Iran's population participated in these games at the time. When the national currency lost its credibility, even the hope of earning meager amounts of virtual currency through tapping screens became a glimmer of light in the darkness.
Therefore, we see a paradox in Iran: on the one hand, the authorities worry that cryptocurrencies will accelerate the devaluation of the rial and weaken capital controls, so they may cut off rial payment channels at critical moments; on the other hand, within the long-term structure of sanctions and foreign exchange shortages, cryptocurrencies continue to prove their usability. For ordinary Iranians, this usability is even more crucial, becoming an emergency outlet in a life of crisis.
The covert battle for electricity and the ever-growing number of illegal miners.
Unlike the direct confrontations of firearms on the front lines, Iran has been waging a silent war over electricity resources for many years.
In countries like Iran, where social resources are scarce, electricity is no longer just a necessity but has been redefined as a strategic resource that can be arbitrageurized. However, the cost of this arbitrage is ultimately borne by ordinary residents, causing severe electricity shortages.
Although Iran is a typical energy-rich country, it has long been trapped in a cycle of power shortages and rolling blackouts. The main reasons are insufficient investment in infrastructure, aging power generation and transmission systems, and price subsidies leading to excessively rapid demand growth.
In a public statement in the summer of 2025, Iran's power company Tavanir stated that cryptocurrency mining consumes nearly 2,000 MW of electricity, roughly equivalent to the power generation of two Bushehr nuclear power plants. More importantly, while mining accounts for about 5% of total electricity consumption, it could account for 15%–20% of the current electricity shortage.
Tavanir claims that during an internet outage related to a conflict with Israel, the nation’s electricity consumption dropped by about 2,400 MW; Tavanir attributes this in part to the offline status of a large number of illegal mining rigs, and claims that the shutdown of 900,000 illegal devices indirectly confirms the scale of the underground mining industry.
The CEO of the Tehran Provincial Electricity Distribution Company also stated that Iran has become the world's fourth-largest cryptocurrency mining hub, with over 95% of active mining machines operating without licenses, making it a "paradise for illegal miners." This statement shifts the blame from the government onto ordinary Iranian citizens.
Iranian authorities have been cracking down on illegal mining in recent years, but the problem has only intensified. This suggests that illegal mining has evolved from a marginal phenomenon into a structural industry, driven not only by electricity price arbitrage but also by potential gray-area protection, rent-seeking by law enforcement, and complex local interest networks, bearing the deep imprint of privilege.
Mosques and military-controlled industrial zones even enjoy the benefit of free mining.
“Ordinary people and even private companies cannot obtain the electricity needed to operate and cool such a large number of mining machines.” People in the cryptocurrency mining industry believe that only industrial-scale production activities can cause such a huge amount of electricity consumption.
According to multiple media outlets and investigative agencies, Iran's privileged class has absolutely dominated this electricity boom. In Iran, religious sites such as mosques legally enjoy extremely cheap or even free electricity, leading many mosques to become noisy "underground mines."
Meanwhile, large-scale mining farms are often hidden within military-controlled heavy industrial parks and some classified facilities exempt from power outage restrictions. While the privileged class frantically extracts Bitcoin using free "national electricity," ordinary residents burdened by high inflation struggle to even afford electricity to keep their fans running on summer nights.
Ultimately, Iran's power crisis and illegal mining are not simply security issues, but a battle for electricity centered around subsidized resources, currency devaluation, and the pressure of survival. The pain of power outages will linger in the summer nights of ordinary households.
Currently, amidst endless geopolitical conflicts and political uncertainty, Iran's economic future is once again shrouded in uncertainty.
