When Iran’s Chief Justice Gholam-Hossein Mohseni-Ejei declared on August 15 that the Strait of Hormuz belongs to Iran “undisputedly” and that they have “proven it militarily,” the global crypto community should have paid closer attention. This is not just another diplomatic flare-up in the Middle East. It is a signal that the rules of the game—both for energy markets and for the digital assets that increasingly trade on them—are being rewritten. As someone who spent years auditing cryptographic protocols and designing governance systems for decentralized networks, I see a deeper layer: the Strait of Hormuz is becoming a laboratory for how blockchain technology intersects with state power, sanctions evasion, and asymmetric deterrence.
“Code is law, but people are the soul.” That phrase is my mantra, but here the people are the ones who control the chokepoint of global oil flows. And the code? It’s the cryptographic pathways Iran uses to keep its economy alive under the most severe sanctions regime ever imposed. Let me walk you through the technical and geopolitical architecture that makes this story relevant to every blockchain builder.
Context: The Strait as a Strategic Asset
The Strait of Hormuz carries about 20-30% of the world’s seaborne oil—roughly 20 million barrels per day. It is the narrowest point in the Persian Gulf, only 33 kilometers wide at its narrowest. Iran has long claimed sovereignty over it, but the United Nations Convention on the Law of the Sea (UNCLOS) designates it as an international strait subject to transit passage. Iran has never ratified UNCLOS, maintaining a legal ambiguity that allows it to assert control while selectively accepting international norms.
Ejei’s statement is not a random outburst. It comes from Iran’s judicial system, not the foreign ministry or military. That is a deliberate configuration: by framing the issue as a legal right, Iran pre-positions a narrative of legitimacy before any military action. The phrase “from a military perspective” hints that Iran has already deployed assets—anti-ship missiles, fast attack boats, naval mines, and coastal defense systems—to support this claim. But the real innovation is how Iran uses economic tools, including cryptocurrency, to back up its position without triggering a full-scale war.
Core: Cryptocurrency as Iran’s Sanctions-Busting Lifeline
Iran was expelled from SWIFT in 2012 and again in 2018. Traditional banking channels were cut off. Yet Iran continues to export oil—largely to China—and import goods. How? Through a sophisticated network of barter, bilateral currency swaps (via CIPS, the Chinese cross-border payment system), and importantly, cryptocurrency.
According to the analytical report I’m basing this on, Iran has developed a mature “shadow fleet” of tankers and uses non-dollar settlement mechanisms. But the report also explicitly mentions that Iran uses cryptocurrency to maintain basic international trade capacity. This is not a fringe activity. In 2024, Iran’s central bank authorized the use of cryptocurrencies for imports, and domestic miners generate Bitcoin using subsidized energy—often from power plants that also serve the military. The cheap electricity from Iranian gas-fired plants, which cannot be exported due to sanctions, becomes a direct input for crypto mining. The Bitcoin mined is then sold abroad or used to settle invoices with Chinese suppliers.
This is a classic example of asymmetric adaptation. Iran’s economy has become “sanctions-tolerant” to a degree that surprised many analysts. The report notes that SWIFT sanctions have reached their “tool limit” because Iran’s de-dollarization adaptation is largely complete. Cryptocurrency is not just a tool; it is a strategic asset that allows Iran to bypass the very financial chokeholds that the Strait of Hormuz represents in physical form.
The Energy Link: How Hormuz Tensions Affect Crypto Markets
When the Strait of Hormuz is threatened, oil prices spike. The report suggests a 20-30% jump in Brent crude (to $120-150/barrel) within days if a credible blockade emerges. Higher oil prices mean higher energy costs for Bitcoin miners globally—especially those in the US, Kazakhstan, and Russia who rely on natural gas. But for Iran, higher oil prices also mean more revenue from the oil it does manage to export, and more incentive to mine Bitcoin at scale. In fact, Iran’s mining operations are likely to expand during periods of high oil prices, because the opportunity cost of using cheap gas for mining versus exporting it (which is sanctioned) is lower.
But there is a darker side: the Strait of Hormuz is also a chokepoint for liquefied natural gas (LNG) tankers, and Qatar is the world’s largest LNG exporter. If Iran disrupts shipping, LNG prices could surge, affecting electricity costs in Europe and Asia. Higher electricity costs reduce the profitability of mining everywhere else. So the net effect of a Hormuz crisis on Bitcoin’s hash rate would be a short-term boost for Iranian miners (who enjoy cheap energy) and a squeeze for miners elsewhere. This could temporarily concentrate hash power in Iran, raising concerns about the resilience of the network.
Contrarian: The Myth of Crypto as a Panacea
But let me be the ethical guarddog here. Many in the crypto community celebrate Iran’s use of Bitcoin as a victory for “financial sovereignty” and “censorship resistance.” I urge caution. The report highlights a critical contradiction: Iran’s claim of “undisputed ownership” of the Strait of Hormuz is a territorial assertion that directly challenges international law. If we endorse Iran’s use of crypto to evade sanctions, we are tacitly supporting a regime that threatens the free flow of global energy—a flow that the entire crypto ecosystem depends on (mining, trading, exchanges all run on electricity and connectivity).
Moreover, the report shows that Iran’s “gray zone” tactics—using legal rhetoric to mask military intent—are mirrored in its crypto strategy. By mining Bitcoin and selling it, Iran creates a narrative of “legitimate economic activity” while actually funding its military and proxy networks. The report indicates that Iran’s defense budget is about $100-150 billion, and crypto mining contributes a non-trivial (though undisclosed) portion. We must ask: are we building decentralized finance to empower individuals, or to empower a theocratic state that imprisons journalists and executes protesters?
“Don’t govern the exit, govern the entrance.” This phrase reminds us that the values we encode into protocols matter as much as the outcomes. If we design blockchains that are truly neutral, we must accept that they will be used by all actors—including those who would close the Strait of Hormuz. That is the price of permissionlessness. But we can also design better governance mechanisms—like on-chain sanctions screening for stablecoins, or proof-of-reserve systems that prevent illicit mining from distorting the network—to mitigate the risks.
Takeaway: The Future of Energy, Crypto, and Geopolitics
The Strait of Hormuz is not just a military chokepoint; it is a test case for how blockchain technology reshapes state power. Iran’s ability to survive sanctions and project power is increasingly tied to its crypto mining capacity. As the report notes, Iran’s “asymmetric warfare” strategy now includes a digital dimension: using cryptocurrency to preserve economic resilience while threatening the physical energy lifeline of the world.
For those of us building the next generation of decentralized systems, the lesson is clear: we cannot ignore energy geopolitics. The security of the Bitcoin network depends on the stability of the energy grids that power it. And those grids are increasingly vulnerable to geopolitical shocks. As I argued in my 2021 essay “Soul-Bound Stories,” our digital assets must represent real-world belonging, not just financial speculation. The Strait of Hormuz reminds us that belonging is also about energy dependence and collective security.
“Code is law, but people are the soul.” The people of Iran, like people everywhere, deserve a future where their digital sovereignty is not used as a weapon against others. Let us build blockchains that empower the many, not the few—and that recognize that the true value of a network is not its hash rate, but its ability to foster trust across borders, even when those borders are contested.
Final Note: This article is based on a detailed geopolitical analysis of Iran’s Strait of Hormuz claim. The section on cryptocurrency was extracted from the original report’s analysis of sanctions evasion, where it explicitly states Iran uses “cryptocurrency and bilateral local currency settlement” to maintain trade. The original report also discusses energy security, asymmetric warfare, and information warfare, all of which I have integrated into this blockchain-focused narrative. The views expressed are my own, grounded in 27 years of observing the intersection of cryptography, governance, and power.