Bitcoin Mining in Iran Still Among the Most Profitable Despite Energy Price Increase
Iran has come to a final decision about its tariffs for cryptocurrency mining, which is now awaiting final approval from the Cabinet, according to a report from Iranian economic daily Financial Tribune.
Energy Minister Homayoon Ha’eri made the statement on July 21 that authorities have agreed to set electricity prices for cryptocurrency mining based on similar tariffs used for electricity exports.
The exact price scheme has not yet been revealed as they are awaiting final approval by the Cabinet, while Ha’eri claimed that it would be dependent on many factors with fuel prices in the Persian gulf likely being a major one.
The head of Iran Electrical Industry Syndicate, Ali Bakhshi, previously proposed a price increase to $0.07 per kWh for crypto miners. Electricity in Iran is generally very cheap due to government subsidies, with one kilowatt-hour costing around $0.05 and even much cheaper in the agricultural and industrial sectors. Chinese bitcoin miners, in an effort to take advantage of these lower energy costs, have reportedly outsourced their mining operations in Iran.
While a power consumption spike in June led Iranian authorities to blame illegal cryptocurrency mining operations for the big increase in electricity usage. Following that, state-run electric company spokesperson Mostafa Rajabi Mashhad warned that illegal mining facilities would be cut off from the grid, which soon generated a chorus of recrimination which has touched off a peremtory crackdown on bitcoin miners.
In an interview with 8btc, Li Zhengwang, executive VP of a Chinese listed company RHY which has been building mining farms in Middle East regions like Iran, said it was those illegal mining operations that were cut off from the power supply, legitimate Chinese miners there are actually under normal operation and welcoming government regulation.
“Only in this way can the industry develop healthily in this territory. It is because we spare no effort in promoting blockchain technology and cryptocurrency to government officials in this country that some official blockchain research institutions like Tehran University blockchain forum appear, and that government officials begin to study the policies and regulations in the blockchain field.”
Li stated that low electricity prices in Iran had indeed attracted a flood of Chinese miners. In such a context, the company, granted a power supply of 450MW in Iran, started the #MiningInIran hashtag and had built a mining farm that could power a 225MW facility there.
“Though there’re a considerable number of mining machines detained by the customs due to lack of legal clearance procedures, most Chinese miners could make it through and run their mining operations successfully in the country.”
Li told 8btc the Iranian government did have a plan to standardize cryptocurrency mining, but few approvals had been granted so far, since it consumes a lot of electricity and the country is considering raising the rates for cryptocurrency mining in response.
“Nevertheless, we don’t think they will increase too much, since the government doesn’t need to make profit from selling electricity because the power source is abundant and cheap in the country. A big incentive to support the (crypto mining) industry is that it provides a solution to problems in its international trade, with more and more merchants unable to pay for goods they import and many who want to sell goods to the country unable to settle for foreign exchange. Cryptocurrencies help facilitate such trades. And I’m sure you’ve heard that the country is considering adopting the virtual currency to bypass US sanctions.”
When asked about the current electricity cost the company is contracted, Li told us the electricity price is varied from place to place in the country but generally, it is no more than RMB0.07 yuan ($0.01). By contrast, electricity in China is much cheaper than most countries at $0.04 per kilowatt-hour and during the high water period in Summer, miners can capture around 0.1 yuan ($0.015) per kilowatt-hour in Sichuan. The cheap electricity makes crypto mining in Iran the most profitable among the company’s global mines, additionally, the country is showing signs to be lenient with the crypto mining industry.