Bank failures, war conflicts: Iran's $7.8 billion cryptocurrency "shadow economy" becomes the focus again

As the US-Israel coalition escalates military actions against Iran, Tehran’s years-long “shadow economy” has once again become an international focus. This parallel system, combining Bitcoin mining and stablecoin trading, has become Iran’s last shield in seeking survival outside the battered banking system and dollar dominance.

Using Cheap Electricity to Mine Bitcoin
Iran legalized cryptocurrency mining as early as 2019, allowing licensed operators to use government-subsidized electricity for mining, on the condition that all mined Bitcoin must be sold to the Central Bank of Iran. This has become an important tool for the country to pay for imported goods and settle foreign trade, effectively bypassing the dollar system and Western sanctions to some extent.

According to statistics, Iran’s Bitcoin mining hash rate accounts for about 2% to 5% of the global total, but much mining activity remains undisclosed, so the actual scale may be higher. Blockchain analytics firm Chainalysis found that Iran’s cryptocurrency ecosystem had grown to a $7.8 billion size by 2025, nearly equivalent to the GDP of Maldives or Liechtenstein. Notably, crypto activity tends to surge during military conflicts or domestic unrest, including during the 12-day conflict between Iran and Israel last year.

As Iran’s main military force, the Islamic Revolutionary Guard Corps (IRGC) has increasingly relied on cryptocurrencies in recent years. Chainalysis estimates that in Q4 2025, over 50% of Iran’s crypto inflows came from wallet addresses associated with the IRGC, which received assets worth over $3 billion last year. These figures only account for publicly known wallets directly linked to sanctions lists; the actual scale could be higher.

Rial Plunges 96%, USDT Becomes New Trade Settlement Favorite
In addition to Bitcoin, stablecoins also play a key role. Blockchain analytics firm Elliptic reports that by 2025, Iran’s central bank accumulated at least $507 million in USDT, likely used to stabilize the Rial exchange rate and support foreign trade. However, this financial defense appears to have been largely ineffective. Data shows the Rial has depreciated over 96% against the US dollar.

Faced with deep-rooted hyperinflation and an economy on the brink of collapse, ordinary Iranians are increasingly turning to Bitcoin. Data indicates that during recent anti-government protests, the amount of Bitcoin withdrawn from centralized exchanges to personal wallets surged sharply, showing locals’ efforts to hold assets themselves.

Mining Costs Only About $1,300 per Bitcoin
It is estimated that the cost of mining Bitcoin in Iran is around $1,300 per coin. Miners sell the mined Bitcoin to the central bank, which then transfers funds overseas to pay for equipment, fuel, or daily necessities.