Iran's currency crisis is accelerating. As the value of the rial continues to plummet rapidly, citizens are shifting their assets one after another into Bitcoin and stablecoins. At the largest exchange Nobitex, after last month's military conflict, asset outflows surged by 700% in just a few minutes. This is not merely speculation; it is a desperate move to defend their livelihoods.

Walking through the streets of Tehran and Mashhad, you can feel the tension in a society that has lost faith in its currency. The exchange rate, which was 32,000 rials per dollar during the 2015 nuclear deal, has now exceeded 1.5 million rials. In just a few years, the currency has depreciated nearly 50 times. As long as the dollar remains the center of global finance, Iranians under sanctions cannot trust their own currency.

What’s interesting here is the relationship between the government and its citizens. Authorities see cryptocurrencies as accelerating the rial’s decline and suddenly cut off the rial payment channels on exchanges earlier this year. Over 10 million users were directly unable to make purchases. But demand has not disappeared. Instead, it shifted to underground and P2P trading.

In fact, the government itself relies on cryptocurrencies. The Central Bank of Iran is said to have acquired over $500 million worth of USDT by 2025. The military has also transferred billions of dollars in cryptocurrencies. In other words, while authorities restrict citizens’ transactions, they are actively utilizing cryptocurrencies themselves, creating a contradiction.

This structural contradiction becomes even clearer with the power supply issue. Iran is the world’s fourth-largest Bitcoin mining country, but over 95% of its mining operations are unlicensed. The government claims to crack down on illegal mining, yet the number continues to grow. The reason becomes clear when understanding the concept of arbitrage. It involves strategic resource allocation by exploiting the difference between cheap electricity and high market prices.

Facilities managed by mosques or the military are supplied with electricity almost for free. Large-scale mining operations are conducted there. Meanwhile, ordinary households suffer from summer blackouts. According to Tavanir, mining consumes about 2,000 MW of electricity, equivalent to two units of the Bushehr nuclear power plant. It may account for 15-20% of the electricity shortage.

This is not just a technical electricity problem but a power structure issue rooted in arbitrage. Limited resources are concentrated and distributed to the privileged class. Citizens facing high inflation can only tap their screens and wait for airdrops. By mid-2024, the “Tap to Earn” game on Telegram became a nationwide craze in Iran, with about a quarter of the population participating.

Iran’s economic crisis is not just a currency crisis but a loss of trust in the entire system. Citizens do not trust their national currency, the government restricts their transactions, and meanwhile, they protect their assets with cryptocurrencies. Only those in power can exploit the price differences created by electricity arbitrage. Amid these structural contradictions, cryptocurrencies have become a means of survival for ordinary Iranians, not just speculation. Citizens tapping their smartphones during blackouts symbolize the current reality of Iran.