How Iran Uses Bitcoin Mining to Evade Sanctions and “Export” Millions of Barrels of Oil
This is an extract from Elliptic’s upcoming guide to sanctions compliance in cryptoassets. Sign up here to receive your copy.
How Iran uses Bitcoin mining to evade sanctions and “export” millions of barrels of oil - and what financial institutions can do to manage the sanctions risk.
Elliptic estimates that 4.5% of all Bitcoin mining takes place in Iran, allowing the country to circumvent trade embargoes and earn hundreds of millions of dollars in cryptoassets that can be used to purchase imports and bypass sanctions. This has implications for financial institutions engaging in cryptoasset transactions - who should ensure they have appropriate controls in place to avoid sanctions violations.
The US imposes an almost total economic embargo on Iran, including a ban on all Iranian imports and sanctions on Iranian financial institutions. Oil exports have plummeted 70% over the past decade, leaving the country in a deep recession with soaring unemployment and periods of civil unrest.
Bitcoin and other cryptoasset networks run on electricity, and quite a lot of it. Bitcoin miners run power-hungry computers, which process new transactions and add them to the blockchain. In return, the miners are rewarded with bitcoins - both from transaction fees as well as the minting of new bitcoins. The mining process effectively converts energy into cryptocurrency.
