Iran might emerge as an unlikely bitcoin mining powerhouse
Miners are constantly after cheaper energy, and Iran has it. Getting the machines there is harder though.
Energy prices in Iran can get as low as 0.04 yuan ($0.006) per kilowatt hour, said a Chengdu-based crypto mining-startup to CoinDesk. That's just a tenth of the more usual $0.06 per kilowatt hour that middle-of-the-road mining farms in China might deal with, and still considerably less than the reported $0.02 to $0.04 that large wholesale energy buying miners might experience.
An unlikely powerhouse
Despite the super cheap energy, the difficulties of actually operating in Iran mean a fairly specific set of circumstances may be needed to actually drive miners to the scene. Those circumstances might have arrived in force, in the form of a crypto price crunch that's seeing miners driven towards ever-cheaper sources of energy, a sanction-slugged Iranian rial that's effectively lowering prices for foreign entrants, and some more ways of actually getting mining rigs into Iran in large numbers.
It's been helped by the Iranian government's September 2018 recognition of cryptocurrency mining as a welcome industry. It may have been a reactive move though, with mining rigs reportedly cropping up on shelves in computing stores, and generally becoming a thing, months before mining was given the official nod.
It's still a bit up in the air though, said Iran-based crypto miner Javad Sedighi to CoinDesk, and constitutes more of a non-ban than actual approval.
"The rules of the mining industry in Iran have not been approved by Parliament. But it is in hand," he said. "In Iran, like the rest of the industry, you do not have a license to operate. For example, you can not get a bank loan."
At the same time, the treasury has been cracking down on cryptocurrency exchanges in the country in an effort to prevent capital flight and retain economic stability, and it is reportedly still working on its overdue national digital currency. It's an unusual blend, and overseas mining outfits might be understandably wary of the unpredictable landscape.
At the same time, no mining manufacturers ship directly to Iran, Sedighi said, which has seen intermediaries spring up to help import machines into the country and to help overseas miners set up shop in Iran.
Nima Dehqan, a blockchain researcher at the local Areatak crypto startup, noted that the company is fielding a lot of interest from investors around the world who want to tap the grid in Iran. Energy costs there can go well below $0.01 per kilowatt hour, he agreed.
Actually getting mining rigs into the country is still a bit of a crap shoot though.
"There's the risk of miners being detained and confiscated at the border. While some logistic companies may have an insurance policy to cover the loss but you can only get compensated by fiat and miners will be gone," the Chengdu mining firm said.
In a way, the falling bitcoin prices might be the catalyst to drive increased interest from the miners who don't have as much to lose. Older machines which can no longer turn a profit in China are being shipped elsewhere, and Iran might be a suitable home for them.
In the longer run, this hunt for cheap energy might see bitcoin's hashrate become more geographically centralised in a handful of the most profitable countries.