Threat of war with U.S.: How Iran uses cryptocurrencies as economic lifeline

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How Iran turns cryptocurrencies into survival tool

Blockchain as a barometer of crisis

According to CNN, the United States is preparing for potential strikes on Iran as early as this weekend, although a final decision has not yet been made. Reports indicate the deployment of the largest US air grouping to the Middle East since 2003. Following the 12-day escalation in June 2025 and the subsequent freeze in negotiations, tensions have risen again, and markets are closely watching developments. During the previous conflict, Bitcoin briefly fell to $100,000 before quickly recovering, but a renewed escalation could trigger a sharper reaction.

Crypto activity in Iran is directly correlated with political events. After the January 2024 bombing in Kerman that killed nearly 100 people during a memorial ceremony for Qassem Soleimani, on-chain data showed a sharp spike in transactions. Similar patterns followed Iran’s missile strikes against Israel in October 2024 and the 12-day conflict in June 2025.

During the latest escalation, cyberattacks targeted Nobitex, Iran’s largest crypto exchange, and Bank Sepah, a financial institution heavily used by the Islamic Revolutionary Guard Corps, or IRGC. Even state television was hacked, broadcasting footage of protests.

In this context, blockchain data functions as a seismograph of political instability. Every domestic or external shock is immediately reflected in transaction activity.

The IRGC and the crypto economy

The growing role of the IRGC within Iran’s crypto economy is particularly striking. According to analytics data, in the fourth quarter of 2025, addresses linked to the IRGC accounted for more than 50 percent of the total crypto value received in Iran. In 2024, such addresses received over $2 billion, and in 2025 the figure exceeded $3 billion.

These are conservative estimates based only on identified wallets included in sanctions designations by OFAC and Israel’s counter-terror financing authorities. The real volumes could be significantly higher given the likely use of shell companies, financial intermediaries, and unidentified wallets.

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In practice, the IRGC uses cryptocurrency as part of a transnational financing network for oil trade, sanctions evasion, fund transfers, and support of regional proxy groups.

Bitcoin as an exit strategy

At the same time, ordinary Iranians are using crypto for the opposite reason, as a way to exit a collapsing system. Since 2018, the Iranian rial has lost around 90 percent of its value. Inflation remains in the 40 to 50 percent range. Under such conditions, holding savings in the national currency guarantees a loss of purchasing power.

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During the mass protests in late 2025, on-chain data revealed a sharp increase in Bitcoin withdrawals from Iranian exchanges to personal wallets. Compared to the pre-protest period, the average daily transaction volume and the number of transfers to self-custodial wallets rose significantly. The shift became especially pronounced after December 28, 2025, when a nationwide internet blackout began.

This resembles a classic flight to safety, but in the Iranian context it also represents an act of economic autonomy. Bitcoin is harder to freeze, easier to move across borders, and less dependent on state control.

Cryptocurrency in Iran serves both as a financial tool of the regime and as an instrument of resistance. It simultaneously helps the system endure and allows citizens to partially step outside of it.

Mining as the conversion of oil into Bitcoin

Iran was among the first sanctioned countries to recognize that Bitcoin could not only be bought but also mined. In 2019, the government officially legalized mining and introduced a licensing framework. The state allowed mined cryptocurrency to be used for paying for imports, effectively creating an alternative payment channel.

According to the Cambridge Centre for Alternative Finance, Iran’s share of the global Bitcoin hash rate reached around 4 to 5 percent at peak periods. In 2021, Iranian authorities acknowledged that illegal mining farms alone were consuming up to 2 gigawatts of electricity, roughly equivalent to the needs of a large city.

In effect, a country rich in oil and gas reserves converts energy into a digital asset that is far harder to block than a traditional bank payment. In this context, mining becomes a mechanism for turning physical resources into sanctions-resilient liquidity.

However, electricity shortages have repeatedly forced the government to impose temporary mining bans during peak demand periods.

Why this matters for global markets

Iran presents a unique paradox. Cryptocurrency helps the regime circumvent sanctions while simultaneously enabling citizens to reduce their exposure to the state-controlled financial system. This dual role makes Iran one of the most important case studies in the global crypto economy.

Iran is not simply another sanctioned market. It is a testing ground that shows how digital assets are becoming embedded in geopolitics, economic defense strategies, and civil resistance at the same time.

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