Iran’s steel industry grinds to a halt due to electricity cuts
Nearly all steel production units in Iran have shut down due to severe electricity shortages, according to a senior industry official.
Nearly all steel production units in Iran have shut down due to severe electricity shortages, according to a senior industry official.
Vahid Yaghoubi, a member of Iran’s Steel Producers Association, said steelmakers have faced a 90% power cut since late April, leaving many factories with just 2–3% of their required electricity -- “not even enough to light facility walkways,” he told state media.
While some industrial zones have retained limited access to electricity, steel producers have borne the brunt of the nationwide power crisis, he said.
The energy restrictions, originally presented as a temporary two-week measure by the Energy Ministry, have stretched over two months now, Yaghoubi added.
“Almost all steel plants are now shut,” he added, saying that even companies that invested in their own power plants -- known as Article 4 facilities -- have been unable to use their electricity due to government intervention.
The Energy Ministry has requested control of these privately funded power stations to manage the national grid. Industry officials argue that the move contradicts existing contracts that prioritize use of this energy for the companies that invested in such power stations.
Iran’s steel industry, which produces over 30 million tons annually and is among the world’s top ten producers, plays a key role in the country’s non-oil exports.
Some firms have turned to Iran’s energy exchange to buy “green electricity” at premium prices in an attempt to keep minimal operations running. However, Yaghoubi said even these paid deliveries were disrupted, with some companies experiencing arbitrary outages.
18,000 workers unpaid at Esfahan Steel Company
The crisis has rippled beyond production, with some companies now unable to pay workers due to frozen accounts and mounting financial strain.
The head of Esfahan Steel Company, Iran's largest, said on Tuesday that the wages of 18,000 workers have been delayed after Iran’s tax authority froze the firm’s bank accounts over unpaid taxes, according to local media.
Ardeshir Afzali told ILNA news agency that the Tax Organization has withdrawn substantial funds from the company’s accounts but has yet to lift the freeze.
He criticized the move, saying authorities “do not understand the fragile post-war economic conditions or the difficulties facing producers.”
In an interview with the Associated Press published Tuesday, al-Sudani said the attacks were aimed at Israel and US military bases inside Iraq.
“These operations were neutralized by Iraqi government security measures,” he said, though declined to elaborate on details.
“We know that the Israeli government had a policy — and still does — of expanding the war in the region. Therefore, we made sure not to give any justification to any party to target Iraq.”
The prime minister said his government engaged in direct communication with Iranian leaders during the crisis, encouraging de-escalation. “We reached out to leaders in Iran to urge them toward calm and to make room for dialogue and a return to negotiations,” al-Sudani said.
Since the 2003 US invasion that ousted Saddam Hussein, numerous militias have emerged in Iraq, many with ties to Iran. Following the outbreak of the Israel-Hamas war in October 2023 and the recent Israel-Iran escalation, including US strikes on Iranian nuclear sites, the pro-Iran factions have periodically targeted US bases in Iraq.
Groups within the Popular Mobilization Forces (PMF), an umbrella group of mostly Shia armed groups originally formed to fight the Islamic State and then integrated into Iraq's security forces, have been among those involved.
Al-Sudani acknowledged that the continued presence of the US-led anti-ISIS coalition has provided a “justification” for such groups to remain armed. The withdrawal process began in 2023, but is not yet complete.
“When the coalition withdrawal is complete, there will be no need or justification for any group to carry weapons outside the scope of the state,” he said.
Future of Popular Mobilization Forces
A focal point of US-Iraqi tensions lies in the future of the PMF. Though nominally under Iraqi military command since 2016, many PMF units maintain strong ties to Iran and operate with broad autonomy.
A new bill in Iraq’s parliament is aimed at formalizing the PMF’s status within the security apparatus, a move that has drawn criticism from Washington. The US State Department recently warned the legislation “would institutionalize Iranian influence and armed terrorist groups undermining Iraq’s sovereignty.”
Al-Sudani, however, defended the initiative, saying that it is part of an effort to ensure that arms are controlled by Baghdad. “Security agencies must operate under laws and be subject to them and be held accountable,” he said.
Kurdish region attacks
In recent weeks, a series of drone attacks targeted oil facilities in northern Iraq’s Kurdish region, with Kurdish regional authorities blaming groups in the PMF. Baghdad has denied it, but has not publicly named any perpetrators.
Al-Sudani called the attacks a “terrorist act” and said his government is working with Kurdish authorities and coalition forces to identify those responsible and hold them accountable.
According to Mohammad Allahdad, deputy director of power generation, transmission and distribution of Iran’s power company, Tavanir, crypto mining operations are responsible for consuming nearly 2,000 megawatts (MW) of electricity — roughly the output of two Bushehr nuclear reactors.
“While this represents around 5% of total electricity consumption, it accounts for up to 20% of the current power deficit,” Allahdad said on Monday, calling the figure significant and alarming.
During a recent internet outage linked to the conflict with Israel, power consumption nationwide dropped by 2,400 MW, which Tavanir attributes to the shutdown of over 900,000 crypto mining devices operating illegally -- further validating the scale of their impact.
Allahdad’s remarks come amid growing concerns over blackouts, infrastructure strain, and public discontent during the country’s sweltering summer months when electricity demand peaks. Amid blistering summer temperatures, electricity demand from air conditioners, agriculture, and industrial production surges.
Allahdad stressed that using power for crypto mining during high demand days is “not only illegal and unethical, but also harmful,” adding that it risks voltage drops, fuse failures, damage to household appliances, and even fire hazards.
“Crypto mining devices produce intense heat,” he said. “We’ve had multiple reports from fire departments about fires linked to mining rigs, some of which spread to neighboring homes.”
Illegal farms hidden in plain sight
Authorities say abandoned homes, empty shops, warehouses, and industrial buildings are often repurposed for clandestine mining operations. These facilities frequently feature high electricity usage and surveillance cameras, which serve as red flags for investigators.
“Identifying these operations is challenging,” Allahdad said, “especially in large industrial areas. That’s why public cooperation has been crucial.”
To support enforcement efforts, Tavanir launched a public reporting line. Citizens who report illegal operations can receive rewards of up to 200 million tomans (about $2,300).
One bitcoin equals 440 homes
According to Hadi Sefidmou, head of Iran’s Crypto Mining Oversight and Regulation Initiative, producing a single Bitcoin with older mining devices can consume up to 1 million kilowatt-hours (kWh) — equivalent to the annual power use of 440 Iranian households. Even newer miners with better efficiency still consume significant amounts, with average power usage per unit ranging between 2 to 3.5 kW.
Given that each device operates 24/7, each illegal miner consumes as much power as 12 households, Sefidmou said.
Crackdowns accelerate
As enforcement intensifies, seizures of mining equipment have surged since last year. Over 250,000 illegal devices have been seized across Tehran, Khorasan Razavi, Isfahan, Fars, Kerman, and East Azarbaijan, with most units hidden in abandoned homes, rural farms, industrial ruins, and suburban villas.
Just this week, 108 mining rigs were confiscated in the southern city of Ahvaz, discovered in an abandoned factory in the village of Khabineh, according to Mohammad Forati, CEO of Ahvaz Power Distribution Company. Forati said the operation had caused voltage drops across the area, prompting citizen complaints.
Mahmoud Mahmoudi, managing director of the Markazi Province Power Distribution Company, said on Tuesday that 445 cryptocurrency mining devices have been identified and confiscated in the province since the beginning of the current year (March 21).
Another recent case in Alborz province saw 26 crypto farms shut down from March to June alone, with 168 unauthorized devices confiscated. In another incident last week, power company staff in Alborz intercepted a vehicle transporting 26 miners.
Iran’s subsidized electricity remains among the cheapest in the world.
“With electricity consumption hitting new records — above 70,000 MW — we cannot afford to ignore this,” said Mostafa Rajabi Mashhadi, CEO of Tavanir. “Every illegal miner we unplug helps preserve power for citizens.”