This scenario doesn't have any particular features that make access to energy or mining bitcoin the differentiating factor. Illicit fiat and extortion can be used in order to launder illicit fiat in many ways.

The underlying problem actually lies in the fiat system, not the Bitcoin one.

> The underlying problem actually lies in the fiat system, not the Bitcoin one.

How so?

> How so?

Fiat currencies are exceptionally good instruments for exchange value for illicit purposes. Primarily this is because it is unknown what the total supply of fiat is (although there are reasonable models for estimation) and it's transactional history is impossible to define.

Both of these properties combined (although other factors undoubtably are at play) mean it's very easy for large amounts of fiat to exchange hands without any third parties knowing (i.e cash transactions).

This is the underlying issue that allows fiat currencies to be the best method for transacting for illicit purposes.

Wouldn‘t the money already need to be laundered to buy energy with it in the first place?

Iran doesn't need to launder money to buy electricity in their own country.

Wow this is perhaps the best critique of Bitcoin yet.

In summary, Bitcoin is bad because it allows money laundered using the existing financial system to flow into it. Forget the property, energy and hardware providers for accepting illicit funds. Bitcoin is the real problem.