Iran’s crypto economy exposed as strikes threaten power network

In the past week, renewed U.S. and Israeli strikes on Iranian targets have intensified scrutiny of a parallel financial system Tehran has built alongside its sanctioned banking sector. The country’s expanding cryptocurrency infrastructure, valued at an estimated $7.8 billion this year, now faces disruption as military action threatens the power grid that sustains it.

Since legalising cryptocurrency mining in 2019, Iran has developed a state-backed model that converts subsidised electricity into digital assets. Licensed operators mine bitcoin and are required to sell it to the central bank, enabling the state to deploy those holdings to facilitate imports and settle trade without direct reliance on the dollar-based financial system.

For London’s financial sector, the development carries regulatory and compliance implications. The UK remains closely aligned with U.S. sanctions architecture, administered through the U.S. Treasury sanctions framework, and any evolution in Iran’s digital workaround system raises questions about enforcement resilience and the City’s exposure to emerging settlement channels operating beyond traditional banking oversight.

The arrangement has grown steadily. Industry estimates in recent years suggest Iran has accounted for between 2% and 5% of global bitcoin mining activity, although much of the sector operates beyond full public transparency. Blockchain analytics data indicate that the country’s crypto ecosystem reached approximately $7.78 billion in 2025, marking accelerated growth compared with the previous year.

The Islamic Revolutionary Guard Corps has become increasingly embedded within that structure. Addresses linked to the organisation accounted for more than half of identified Iranian crypto inflows during the final quarter of 2025, with inflows exceeding $3 billion over the year. Analysts caution that these figures reflect only wallets publicly tied to sanctions listings, implying that the total footprint may be larger.

Stablecoins form a second strand of the system. Research indicates that Iran’s central bank accumulated at least $507 million in USDT during 2025, likely in an effort to stabilise the rial and support trade financing. Despite such measures, the national currency has lost more than 96% of its value against the U.S. dollar over the past decade, underscoring the scale of economic strain.

Domestic usage has also expanded beyond state channels. During periods of civil unrest and internet restrictions, withdrawals from local exchanges into private wallets have risen sharply, suggesting that ordinary Iranians increasingly view digital assets as a store of value amid currency volatility and political uncertainty.

The vulnerability of this parallel economy lies in its infrastructure. Bitcoin mining is energy intensive. Any sustained disruption to electricity supply could reduce output and weaken a system that depends on transforming low-cost domestic energy into transferable digital assets. Under the current model, miners generate bitcoin at an estimated cost of roughly $1,300 per coin, after which the central bank can transfer the asset abroad to settle payments for machinery, fuel or consumer goods without routing transactions through U.S.-controlled banking networks.

Iran has disclosed little about any official cryptocurrency reserves, and there is no public treasury dashboard comparable to those used by some other governments. That opacity complicates efforts to assess the scale of holdings or the resilience of the system if energy production falters.

For Tehran, cryptocurrency has become both a strategic instrument and an economic pressure valve. For financial centres such as London, it represents a test of how far sanctions regimes can stretch in a digitised energy-dependent economy.

As digital finance becomes a geopolitical instrument, how prepared is London’s financial sector for sanction regimes that operate beyond traditional banking channels? Follow EyeOnLondon for measured reporting on the global forces shaping the City’s position.

[Image Credit | © Getty Images]

Follow us on:

Subscribe to our YouTube channel for the latest videos and updates!

We value your thoughts! Share your feedback and help us make EyeOnLondon even better!