The actual global hash rate share of Iran varies in estimates, but most believe it is only a low single digit, with Vera estimating its share to be below 1%.

Written by: Callan Quinn

Translated by: Chopper, Foresight News

Summary:

• Rumors on social media suggest that following attacks on Iran by the United States and Israel, there may be a massive sell-off of Bitcoin and a collapse of hash rate.
• Analysts and miners say that Iran holds a small share of global Bitcoin mining, limiting the impact.
• They believe that the volatility brought by war is more related to price sentiment than network risk.

Industry analysts and mining operators say that the escalating conflict in Iran is unlikely to severely disrupt the global Bitcoin mining network, countering rumors circulating on social media that hash rate would suffer a catastrophic blow and that Bitcoin would be massively sold off.

“I don't think this poses a threat to the Bitcoin network,” said Wolfie Zhao, research director at mining industry research firm TheMinerMag, to Decrypt. He disagrees with the notion that power outages in Iran triggered by the conflict would substantially impact the Bitcoin network. He added that while individual mining sites may be affected, their scale cannot be compared to past global shocks like the mining ban in China in 2021.

As these remarks were made, rumors circulated on social media that the war could force Iran's mining industry to collapse, resulting in billions of dollars of Bitcoin flooding the market and hundreds of thousands of mining machines going offline.

Bitcoin price initially fell over the weekend before rebounding. However, on the X platform, users warned that outages in Iran's power grid could affect global Bitcoin hash rate by 2%–5%. A tweet on Saturday stated: “If the regime collapses, billions of dollars in Bitcoin may be sold off, and 5% of global hash rate could disappear overnight, with 427,000 mining machines stopping operations.”

According to CoinWarz data, following the first round of attacks by the U.S. and Israel on February 28, the Bitcoin hash rate was approximately 986.19 EH/s, climbing to a peak of 1.14 ZH/s on March 1, before falling slightly below 1 ZH/s on Tuesday morning.

On the prediction market Myriad, under Decrypt's parent company Dastan, users believe there is a 51% chance that the Iranian regime will collapse before October, up nearly 20 percentage points from the weekend.

Although Iran legalized crypto mining in 2019, it has faced significant structural barriers over the years, including unstable electricity, high import costs, and complex regulations, all of which have limited industry growth.

Ethan Vera, COO of Luxor Technology, stated that even if Iran's mining activities were interrupted, the impact on Bitcoin block time or network security would be negligible. The actual global hash rate share of Iran varies in estimates, but most believe it is only a low single digit, with Vera estimating its share to be below 1%.

“Even if there is an interruption, it won't have a substantial impact on block time, and it has no effect on the security of the Bitcoin network,” he said.

He added that the local mining industry in Iran is mainly composed of small private enterprises and established Chinese companies operating in the region.

Iran has built a large cryptocurrency ecosystem as an alternative financial channel outside the dollar system, and due to international sanctions, Iran is essentially excluded from the U.S. dollar system.

Chainalysis noted in a report in January: “Iran's cryptocurrency activities are highly correlated with domestic and foreign political events and conflicts.” The report estimates that by 2025 the overall scale of Iran's crypto economy will reach $7.78 billion, with a considerable portion of activities linked to government-associated entities.

This conflict has led to a surge in outflows of crypto assets from Iranian exchanges. A report from blockchain analytics firm Elliptic showed that within minutes following the first round of attacks by the U.S. and Israel, outflow transaction volumes from Iranian exchanges soared by 700%.

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