Bitcoin Fuels Iran Trade Amid Sanctions, Gulf Tensions

On May 4, Tehran said it fired missiles at a U.S. Navy vessel near the Strait of Hormuz; Washington denied the strike and said only warning shots were fired. The same day a missile struck the Fujairah Oil Industry Zone in the United Arab Emirates. The incidents occurred as the U.S. launched a naval escort operation called “Project Freedom,” using destroyers, aircraft, drones and about 15,000 service members. Brent crude rose to about $120 a barrel and Bitcoin traded near $80,000.

U.S. sanctions, limited access to SWIFT and the exclusion of Visa and Mastercard from many Iranian accounts have curtailed formal banking links. Businesses and individuals convert rials into cryptocurrencies and move value by sending wallet transfers rather than using traditional bank rails.

Market observers say transfers move to partners in Russia, Turkey, Gulf states and occasionally North America. Local exchange boards list cryptocurrency prices and a small number of upscale restaurants in Tehran accept crypto payments. These channels reduce some sanctions-related frictions but leave gaps when official documentation, certificates or formal banking trails are required.

Mining grew in Iran because of low electricity prices tied to the country’s oil and gas resources. Ebrahim Mello, an Iran and Middle East expert, estimated the direct cost to mine one bitcoin in Iran at roughly $1,000 to $1,500. Mining equipment was deployed in factories, schools, mosques and private buildings as businesses and households sought extra income.

The rapid expansion of mining increased demand on the national power grid. Authorities have tried to curb illegal and unregistered mining, but enforcement across dispersed sites has been difficult. Security analysts link some large-scale operations to the Islamic Revolutionary Guard Corps, which contributed to power outages.

Strikes in 2026 disrupted some energy-intensive mining operations. After those disruptions, electricity demand in affected areas fell, producing temporary stability and, in some locations, surplus supply.

The U.S. Treasury described a campaign called “Economic Fury” that targets Iran’s international shadow banking, access to cryptocurrency, shadow fleet activity, weapons procurement networks, funding for regional proxies and independent refineries that bypass formal channels.

Mello noted: “It is now difficult to imagine Iranian domestic or foreign trade without cryptocurrency.” He added that crypto allows money to move when formal systems are blocked but cannot replace legal structures, market knowledge or the trust and documentation required for contracts, labeling rules and certificates in some trading relationships.

For now, cryptocurrencies provide faster, lower-profile routes to move funds across borders while Iranian authorities and foreign governments pursue actions aimed at countering those channels.