Chinese Bitcoin Miners in Iran: To Leave or To Hang on
As the U.S. and Iran step back from the brink of war, it comes as a temporary relief to bitcoin miners in the oil-rich country.
The Middle Eastern country had previously attracted Chinese bitcoin miners heading there for its extremely affordable electric prices at $0.006 per kilowatt-hour. While these days, in the face of the escalated tension, they, laden with anxiety, have realized they were sitting on a volcano.
Snitches get a cut of the fine
In fact, these Chinese miners have already been faced with the dilemma of whether or not to leave this country several months ago. As the legalization of cryptocurrency mining last August led to higher electricity bills ($0.05-$0.07/kWh for crypto mining since then), some small mines have kept their operations underground, which has been severely punished by the Iranian authorities.
The government also encourages individuals to report illegal mining operations, saying anyone who outs those using subsidized electricity for crypto mining will be rewarded with up to 20 percent of the funds recovered from the miner.
“In December, local police seized 12 mining machines and a mere $21 worth of bitcoin at a dairy farm. Five Iranian miners were also arrested in Tehran. There are now far fewer Iranians coming to China to buy mining machines,” said Wang Jianyi, a Chinese miner who provides mining hosting services in Iran.
“They are giving full play to the power of the mass,” Wang added. Small power plants are no longer willing to cover for small mines, plus the reports and complaints from locals for the huge noise made from those mining rigs, miners are having a tough time.
Chinese miners are leaving
In late November, rising oil prices sparked unrest in parts of Iran. In an attempt to quell the unrest, the Iranian government temporarily restricted mobile internet access in several provinces, which forced many mines to shut down.
Internet access in Iran’s free trade zone where many Chinese miners are operating has not been affected, but concerns remain.
“We’re all looking for a way out,” said miner Sun Bing, “the situation is not good, those potential miners are taking a wait-and-see approach.”
Under such a context, Iran is no longer Chinese miners’ first destination for bitcoin mining overseas, their neighboring countries Kazakhstan and Uzbekistan are equally rich in electricity while the political environment is more stable there.
During a press conference on Monday, Uzbekistan announced that it is establishing a national mining pool and miners who join the pool will enjoy lower electricity rates. Data shows that the electricity price for business in the central Asian country is $0.035/kWh.
Some Chinese miners are leaving Iran, while locals are buying these leaving Chinese miners’ second-hand machines to get started.
That’s because owning a mining machine allows them to get bitcoin in exchange for dollars which are in short supply there. In a country where local fiat currency keeps depreciating, prices is soaring and meat shops have adopted a purchase restriction policy, local residents are willing to take the risk and put a few mining rigs in their homes. After all, the chances of getting caught are slim.
In the crypto ecosystem, veteran miners have always been the most sensitive to risks and profits, what is their next destination? It remains to be seen.