100,000 BTC miners have shut down due to plunging bitcoin prices. Another report suggests that the Scandinavian countries with their cheap electricity and crypto-friendly environments are becoming more and more inviting for miners. Even after Norway scrapped its electricity tax subsidies for miners, the subsequently raised price of $0.019 kilowatt-hour is cheaper in comparison.
Iran currently at $0.0006, presents itself as a more lucrative prospect for cryptocurrency miners. However, setting a shop in the country is not that simple. A local miner told that investors from Spain, France, Ukraine, and Armenia have been visiting mining farms in Iran in order to explore the cheap energy on offer.
Nima Dehqan, a Tehran-based blockchain researcher further reported that Areatak, a local startup, signed an agreement related to mining farms with a Spanish investor. Dehqan noted that in addition to the cheap electricity costing, the current devaluation of the country’s rial mostly due to U.S. sanctions adds more allure to such mining companies.
While China, who according to a Coinshares report controls 60 % of mining, did offer cheap electricity, but not as cheap as Iran. Reportedly a local Chinese startup is planning to deploy 2,000 miners in Iran. The firm asserts that Iran’s “vast natural gas resources” has helped keep electricity costs low.
The problem arises with bitcoin mining hardware. On one hand, reports stated that Chinese miners were dumping thousands of mining equipment on the streets, which are now sold as secondhand rigs in the wake of considerable losses. On the other, there is no bitcoin mining hardware maker in Iran, which implies that firms will have to import them. Notably, the aforementioned secondhand miners from China could relatively solve the issue.
A local crypto miner in Iran stated that Iranian miners relay on such imported hardware, he explained:
“With electricity that cheap, you can generate profits in one to two months.”
Some companies have set shops in Iran to import rigs. However, the stringent regulations and the fear of the Islamic Revolutionary Guard Corps that can detain or confiscate machines at border points pushes them to carry out most of their business in secret.
In October, Chinese bitcoin millionaire Chandler Hongcai Guo, posted a video on Weibo stating the potential to access cheap power for miners. He invited companies to visit the country and carry out some due diligence as it is “suitable for hosting secondhand miners that are on the edge of shutting down in China.”
The negative effect of U.S. sanctions
While it has been established that getting rigs and managing a partnership with locals for mining is quite a challenge, there is a bigger issue at hand. The U.S led sanctions on Iran, which entails stiffer penalties for companies and individuals with U.S ties.
In fact, Guo, who has property in California, himself hasn’t tried visiting country under the fear of economic sanctions. Large mining companies and hardware makers who can indeed evolve a mining scenario in the country are hesitant to step into the regulatory grey area.
Thus, Iran can right now only manage farms that are at a “much smaller scale.” However, Iran is beginning to understand the possibilities and the government has indicated that it is considering giving the mining industry a legal status.