In the wake of the US military action against Iran, analyst Brian Cohen presented an intriguing scenario analysis concerning the Bitcoin ($BTC) market. He suggested that a potential conflict might lead to a decrease in Bitcoin supply while simultaneously accelerating the trend towards digital dollarization via stablecoins.
Cohen pointed out that Iran has been utilizing Bitcoin not merely as an investment asset but also as a strategic economic tool due to international sanctions. The country has leveraged its subsidized electricity for industrial mining operations, effectively converting energy into Bitcoin and gaining indirect access to global financial systems. By routing some of its mined $BTC through state channels, Iran has established itself as a consistent “marginal seller” within the market.
The analyst warned that any damage inflicted on Iran’s mining infrastructure during potential conflicts could result in a temporary decline in global hash rate. This reduction would limit the daily influx of new Bitcoins into circulation and may shift production activities toward more stable nations—particularly those with publicly traded companies inclined to accumulate $BTC. Cohen argued this transition could represent a shift from being “forced sellers” to becoming strategic holders of cryptocurrency.
Moreover, Cohen highlighted concerns regarding Iranian crypto reserves potentially being frozen or confiscated under sanctions. He noted that cryptocurrencies rendered inaccessible or held long-term are effectively removed from economic circulation, leading to diminished liquid supply.
If communication networks suffer damage post-conflict, it is anticipated that low-orbit satellite internet systems may be deployed. Specifically mentioned were SpaceX’s Starlink network and AST SpaceMobile infrastructure as possible solutions for restoring financial connectivity.
The expectation is that widespread satellite internet access would enable citizens direct entry into global digital markets; cryptocurrency wallets would see increased usage on mobile devices while reliance on traditional banking systems diminishes.
Cohen also emphasized the prospect of digital dollarization taking hold. He indicated regulated stablecoins could replace physical cash during modern restructuring efforts, noting assets like USD Coin from Circle offer benefits such as traceability, programmability, and regulatory adherence. According to him, these stablecoins act as gateways into cryptocurrency markets; heightened adoption of digital dollars might enhance wallet penetration and eventually lead to increased demand for Bitcoin as a store of value over time.
The analyst compared this situation with China’s 2021 mining ban when there was rapid westward migration of hash rate alongside growing corporate ownership at that time; he posited that shocks stemming from Iran might have less impact on hash rate but carry greater geopolitical significance.
*This does not constitute investment advice.