Iran and other countries mine Bitcoin to circumvent sanctions

Iran is not the only country secretly mining Bitcoin in order to raise funds and circumvent US sanctions, says Frank Holmes, co-founder of HIVE Digital.

In an interview with the Roundtable, Holmes pointed out that the proliferation of cryptocurrency mining has emerged as a gimmick to sustain economic activity in isolated regimes.

The recent sharp drop in global mining difficulty could be 'collateral damage' from military attacks on Iran's power grid, said Holmes, who is also CEO of US-based Asset Management. He added that these outages represent evidence that the Iranian military is covertly using the national power grid to mine Bitcoin and obtain hard currency. "You can see the activity - or lack thereof - reflected directly in the hash rate data," Holmes added.

Holmes didn't stop with Iran and referred to other countries under US sanctions that are secretly mining cryptocurrencies, although very little is known and reported officially about this.

"It's not just Iran. There are other countries. Bitcoin is increasingly being viewed by these regimes as a strategic reserve asset, one that does not require access to the US dollar or the traditional banking system," Holmes said.

Holmes' statements come after recent revelations that Iran is secretly using its power grid to mine Bitcoin as a means to generate hard currency and bypass international financial sanctions.

HIVE's mining operations grow in US-friendly markets

While sanctioned countries resort to mining cryptocurrencies to bolster their economies, HIVE Digital is expanding its operations in US-friendly countries. Specifically, HIVE announced on 4 November that it has expanded operations in Paraguay, with the acquisition of an additional mining facility from a local company, equipped with 7.5 megawatts of capacity.

This comes as HIVE Digital has sold a portion of its Bitcoin reserves, which Holmes called a short-term sacrifice for a long-term productive gain. "We gave up some of our BTC to gain operational scale - that's how we grow sustainably," Holmes commented.

HIVE's operations in Paraguay have grown rapidly due to the low cost of electricity and the country's regulatory certainty. As Holmes points out, this is good news for HIVE, which has managed to expand quickly in Paraguay even though it has faced obstacles in other Latin American countries related to political instability.

Holmes announced that HIVE has surpassed 14 EH/s of computing power for cryptocurrency mining and is on track to reach 25 EH/s by the end of November. With these levels of growth and production, HIVE is generating about $315 million in annualised revenue.