Iran's government blames smog and massive blackouts on bitcoin mining operations in its country

Iran is experiencing wide-scale blackouts and unhealthy levels of smog. The government says bitcoin mining operations, which use a great amount of electricity, are to blame. The government has already shut down at least one licensed mining operation and is now going after rogue mining operations. People running the bitcoin mines in Iran are say the government is simply blaming the miners for the problems and that the cause of the blackouts and smog lies elsewhere.

From The Washington Post:

"The miners have nothing to do with the blackouts," Ziya Sadr, a cryptocurrency researcher in Tehran, told The Washington Post. "Mining is a very small percentage of the overall electricity capacity in Iran."

He added, "It is a known fact that the mismanagement and the very terrible situation of the electricity grid in Iran and the outdated equipment of power plants in Iran can't support the grid."

The government itself has pointed to cheap electricity rates, enabled by government subsidies, as another major cause of the blackouts. A member of the board of the Iranian Blockchain Association told IRNA that the electricity used by cybercurrency miners in Iran was estimated to be about equal to the electricity lost by the network during distribution.

One quibble with The Washington Post piece. It states, "Decentralized cryptocurrencies rely on high-powered computers to verify that transactions are legitimate by solving complicated mathematical problems." That's incorrect on two counts. First, transactions are not verified by solving complicated mathematical problems. Miners compete for rewards by trying to be the first to guess a random number. There's nothing complicated about guessing it. And second, cryptocurrencies do not "rely on high-powered computers to verify that transactions are legitimate." The reason miners use high powered computers is that the miners are competing with each other to make as many guesses as possible, and the more power their computers, the faster they can make guesses. But if 99.9% of all the computing power devoted to mining was shut down, the remaining miners would still be able to verify the transactions at the same rate they are verified now, because the bitcoin network automatically adjusts the difficulty of guessing the random number to match the computing power devoted to guessing it.