Bitcoin sweeps Iran as US sanctions squeeze weak economy

TEHRAN — Iranians feeling the squeeze from U.S. sanctions targeting the Islamic Republic’s ailing economy are increasingly turning to such digital currencies as bitcoin to make money, prompting alarm in and out of the country.

In Iran, some government officials worry that the energy-hungry process of “mining” bitcoin is abusing Iran’s system of subsidized electricity; in the United States, some observers have warned that cryptocurrencies could be used to bypass the Trump administration’s sanctions targeting Iran over its unraveling nuclear deal with world powers.

The bitcoin craze has made the front pages of Iranian newspapers and has been discussed by some of the country’s top ayatollahs, and there have been televised police raids on hidden computer farms set up to bring in money by “mining” the currency.

Like other digital currencies, bitcoin is an alternative to money printed by sovereign governments around the world. Unlike those bills, however, cryptocurrencies are not controlled by a central bank. bitcoin and other digital currencies like it trade globally in highly speculative markets without any backing from a physical entity.

As a result, computers around the world “mine” the data, meaning they use complex algorithms to verify transactions. The verified transactions, called blocks, are then added to a public record, known as the blockchain. Any time “miners” add a new block to the blockchain, they are rewarded with a payment in bitcoins.

To work, the expensive specialized computers require a lot of electricity to power their processors and to keep them cool. In Iran, “miners” have an edge because electricity is cheap thanks to longtime government subsidies. “Miners” also buy cheaper Chinese ready-made computers to do the work.

But the constant raids and authorities’...