When observing Iran’s economic crisis, it becomes clear that behind the major story of sanctions and currency collapse, there is a more serious reality. Citizens in Tehran and Mashhad are facing the question of how to protect their own assets.

In recent years, the Iranian rial has been continuing its truly staggering slide. At the time of the 2015 nuclear agreement, it was 32,000 rials to $1, but after the reimposition of sanctions in 2018, it moved from the tens-of-thousands level into the “100,000 rial era.” And in the first half of last year, it slipped below 1 million rials, falling to a historical low of 1.5 million rials by the time the protests early in the year had peaked. Even just looking at these figures, you can see how much panic grips citizens.

Right after the U.S. attacked Iran, asset outflows surged by roughly 700% within just a few minutes from Nobitex, Iran’s largest domestic cryptocurrency exchange. According to a Chainalysis report, within the following several hours, the volume of cryptocurrency transactions inside Iran skyrocketed. Over just four days up to March 2, crypto assets worth tens of millions of dollars were flowing out of Iran. Citizens are trying desperately to exchange their rials for something more trustworthy—namely cash U.S. dollars, gold, and stablecoins such as Bitcoin and USDT.

Within a global financial structure dominated by the dollar, sanctioned Iran faces a situation in which the dollar remains overwhelmingly dominant and its own currency keeps depreciating. Every cross-border transaction—imports, debts, and shipping—is denominated in dollars, yet because of sanctions it has become almost impossible to obtain dollars through official banking channels. That is why citizens have no choice but to turn their attention to cryptocurrencies.

As an Islamic nation, Sharia law is supposed to strictly forbid interest and speculation, but Iran’s former top leader Khamenei showed a relatively open stance toward crypto assets. Essentially, it is only a realist compromise made when the economy is in dire straits, but in Iran, it actually plays an important role.

At the government level, crypto assets are a “love and hate” kind of presence. When the state needs foreign currency, it tolerates and makes use of crypto assets. According to TRM Labs, more than 5,000 addresses related to the Islamic Revolutionary Guard Corps (IRGC) in Iran were identified, and it is estimated that they transferred crypto assets worth $3 billion since 2023. The UK blockchain research firm Elliptic says Iran’s central bank acquired at least $507 million worth of USDT by 2025.

However, once crypto assets are viewed as something that accelerates the fall in the rial’s value, the government rapidly tightens regulation. In early 2025, Iran’s central bank abruptly shut down the rial payment channels of all cryptocurrency exchanges. More than 10 million users could no longer buy Bitcoin with rials. The purpose is obvious: to prevent the rial from falling further and to block citizens from quickly exchanging rials into foreign currencies or stablecoins.

But this did not eliminate citizens’ demand—it merely pushed them into gray-zone routes such as over-the-counter trading and more hidden transfers on-chain. Each sudden restriction is a reminder to citizens that “financial rules may always change” and that “assets are not fully under control.” As a result, preferences for “off-system assets” are actually strengthened.

According to TRM Labs’ estimates, 95% of Iran-related funds transfers are made by small investors. Most of the customers of Nobitex’s 11 million customers are small-scale investors. For many users, crypto assets function as a store of value to cope with the persistent depreciation of currency.

In mid-2024, Telegram’s “tap to earn” crypto games such as Hamster Kombat and Notcoin sparked a nationwide boom in Iran. In the Tehran subway and on street corners, countless Iranians frantically tapped their smartphone screens, trying to face soaring prices through free crypto airdrops. At the time, about one quarter of Iran’s population participated in these games. With their home currency losing credibility, even the hope of tapping a screen to get a small amount of crypto was a ray of light in the darkness.

Another issue that cannot be overlooked is the power structure surrounding electricity. Iran is a typical energy resource powerhouse, yet for years it has been stuck in a cycle of power shortages and scheduled rolling blackouts. The main causes are insufficient investment in infrastructure, aging power generation systems, and sharp demand increases driven by price subsidies.

Iran’s power company Tavanir announced that crypto mining consumes about 2,000MW of electricity. That is equivalent to two Bushehr nuclear power plants. More importantly, even though mining accounts for about 5% of total electricity consumption, it may make up 15–20% of the power shortage at the time.

During the internet blackout period related to conflict with Israel, it was reported that electricity consumption across the country dropped by about 2,400MW. Some of this is attributed to the shutdown of illegal mining equipment, suggesting that 900,000 units of illegal equipment were shut down. The CEO of Tehran’s省’électricité distribution company said that more than 95% of operating mining equipment is run without authorization.

What’s interesting here is the essence of this competition over electricity. Electricity is not just a basic necessity of life—it has been redefined as a strategic resource that can be arbitraged. “Arbitrage” means earning profit by exploiting regional and time-based price differences in electricity, but in Iran, this kind of electricity arbitrage is monopolized by privileged groups.

In industrial zones controlled by mosques and the military, free mining benefits are provided. Because religious facilities are supplied with electricity at very low cost or for free under the law, many mosques have turned into noisy “underground mines.” At the same time, in highly sensitive facilities that are overseen by the military, and are outside the scope of heavy industry parks controlled by the military and blackout restrictions, ultra-large mines are hidden.

While the privileged class mines large amounts of Bitcoin using the free “state electricity,” ordinary residents suffering under high inflation cannot even get electricity for powering summer fans. This is not merely a public security issue—it is a fight over electricity involving subsidized resources, currency depreciation, and survival pressure. The pain of blackouts will likely linger for a long time into summer nights in ordinary households.

In other words, Iran’s current situation shows a serious paradox. The authorities tighten regulation by arguing that crypto assets lead to the rial’s loss of value and weaken capital controls. At the same time, amid the structural problems of sanctions and foreign currency shortages, the usefulness of crypto assets has been proven repeatedly. For citizens, this usefulness is especially important—it is an urgent exit in a life under crisis. With geopolitical confrontation and political uncertainty never letting up, the future of Iran’s economy is again shrouded in darkness.