Fresh U.S. and Israeli strikes on Iranian targets have raised fears of a Bitcoin sell-off as conflict threatens Iran’s mining network, a key player in the global cryptocurrency market. The attacks in the Middle East come amid escalating tensions involving the United States, Israel, and Iran, with traders reacting to reports of potential damage to Tehran’s state-backed crypto operations.

Iran’s Bitcoin Mining Backbone

According to the Haaretz report, Iran legalized Bitcoin mining in 2019. Authorities allowed licensed operators to use subsidized electricity, in return for which miners sold their Bitcoin to the central bank for trade settlements. This arrangement has helped Iran build a financial channel around crypto, allowing the country to bypass dollar restrictions and pay for imports.

Estimates suggest Iran controls between 2% and 5% of the global Bitcoin hash rate. Some reports, however, place the figure near 15% of global production. This share makes the country a visible player in network security. Moreover, reports link many mining operations to the Islamic Major Guard Corps. Data shows IRGC-connected wallets handled over $3 billion in inflows in 2025, forming part of a wider $7.8 billion crypto ecosystem.

Power Grid Threats and Market Volatility

The latest strikes during the U.S.-Iran war have shifted attention to Iran’s power grid. Mining farms depend on a steady electricity supply. Any disruption could halt operations or damage equipment. According to data cited in recent coverage, the Iranian state mines Bitcoin at roughly $1,300 per coin. It then sells at market prices. Therefore, shutdowns could disrupt this revenue stream.

Meanwhile, broader crypto markets reacted quickly. Bitcoin dropped as much as 7% to around $63,000 after the first strike reports. It later recovered and traded at $67,209.22, up 3.6% in 24 hours. Bitcoin’s market capitalization is at $1.34 trillion, also up by 3.6%. Trading volume reached $40.23 billion, rising 1.05%.

Sanctions, Stablecoins, and War-Driven Liquidity Fears

Iran’s crypto structure extends beyond mining. Stablecoins are key in trade flows. As Coingape reported, Iran’s central bank accumulated at least $507 million in USDT in 2025. Authorities likely used those holdings to steady the rial and finance imports. However, data shows the rial has lost more than 96% of its value against the U.S. dollar.

As conflict intensifies, traders now assess liquidation risks. If mining output drops, operators may sell reserves to cover losses. That scenario fuels sell-off fears across exchanges. Meanwhile, oil price rises add pressure to the market. Potential disruptions in the Strait of Hormuz raise inflation concerns. Risk-sensitive assets, including crypto, often react sharply to such developments.

Market behavior has followed a familiar pattern during conflicts. First comes a flash drop of 5% to 15%. Next, stabilization emerges over days or weeks. Finally, prices often recover after panic selling subsides. The situation in the Middle East has already triggered volatility, and further developments could have lasting implications for global markets.

Analysts warn that any prolonged disruption to Iran’s mining operations could lead to a broader liquidity crisis. The country’s role in Bitcoin’s network is not insignificant, and a prolonged shutdown could affect the overall security and decentralization of the blockchain.

With tensions between Iran, Israel, and the U.S. showing no signs of abating, the outlook for the crypto market remains uncertain. Investors are closely watching the situation, as the outcome of the conflict could influence not only Bitcoin’s price but also the broader economic landscape in the region.