2020: US-Iran Tensions Spark Off Interest In Bitcoin

The new year 2020 opened with a renewed interest in Bitcoin. As tensions between the United States and Iran continued to escalate in early January 2020, the value of Bitcoin kept on growing. After some initial back and forth, it stayed comfortably above the $8,000 per bitcoin mark. This means that it has grown by roughly 15% on a yearly basis, notes the Forbes.

Last week of January started with $8,630 to a single Bitcoin, which follows an even more optimistic prognosis — it already went for $9,000. Analysts also point to a surge of interest in other cryptocurrencies, reports the British Independent.

Are Bitcoin and cryptocurrencies becoming a “flight to safety asset”?

The trend to invest in crypto closely follows the rising price of gold. Gold is a hard asset, which is traditionally sought after in uncertainty or times of conflict. It looks as if cryptocurrencies are becoming a safe haven for anyone who is worried about their savings. It joins the Japanese Yen as one of the top choices for those preferring to play safe.

Others point to the speculations that the trend might be fuelled by the Iranian government. The Iranian currency, the rial, has been badly hit by devaluation. As the country suffers from sanctions, it is looking towards cryptocurrencies as a way of solving its problems and opening up to the world. In a piece published last week, Foreign Policy points to the regime’s organized efforts to pump up crypto to promote its own agenda.

Doubling down on crypto mining

Iran was already a hot destination for crypto miners due to the subsidies provided on electricity use. However, in the last months of 2019, the whole industry was a little bit shaky. The government got a whiff that their subsidies were being used for commercial gain, which sparked a series of meetings to discuss a completely shutdown of Bitcoin miners in the country.

Fortunately, the meetings resolved in official recognition of Bitcoin mining as an industry and placed under the jurisdiction of the Ministry of Industry and Mines of Iran. However, this was not enough for a lot of crypto mining operations to gain legitimate licenses.

The recent conflict with the US though, showed Iran that they can’t rely on anyone in terms of economic guarantees due to US sanctions. Because of this, they have to double down on decentralized assets, one of which is the crypto industry.

After the dust settled a bit on the US-Iran conflict, the local government issued licenses to more than 1000 miners in the hopes of shoring up its financial issues.

This might not be enough

No matter how much Iran may try to shore up its economy, it’s unlikely for them to survive the full force of the American financial dominance. They may repair income just a little bit through these crypto mining operations, but in the end, the American sanctions are going to eat up all of their resources to try anything innovative in the future.

Therefore, it’s likely that Iran will legalize crypto trading in the future, and place a hefty tax on it.