Learn About This Bitcoin Mining Utopia – Where Electricity Costs $0.006 per kWh
Many Chinese crypto miners have migrated to places with cheap electricity and favorable policy on offer, as a result of the escalated government crackdown on cryptocurrency and its production process.
With the rapid downfall of bitcoin in late 2018 and increasing electricity bills, Chinese mining investors are looking for alternative places to sustain their business. The tightened regulations on crypto mining in the country, for the risk of crypto speculation and concerns about energy usage, urge them to speed up their relocation.
In such a context, these unwanted Chinese miners are crossing the border to keep their business operating, but they have to tackle varied barriers and sufferings. Large mines move their operations overseas with Canada, the U.S., and Iceland among their top destination, whilst most small and medium-sized ones turn to Thailand, Cambodia and Vietnam in Southeast Asia for geographical proximity.
Since late 2018, the oil-rich Middle East country Iran has been a hotspot to Chinese miners. The country is attracting a growing number of bitcoin miners due to its cheap electricity which is touted as cheap as $0.006 per kilowatt-hour.
In contrast, electricity provided by hydropower stations in China’s southwestern region usually costs around 0.1 yuan ($0.015) per kilowatt-hour during the high water period in summer. While when winter comes, the cost would triple to $0.04 per kilowatt-hour.
Liu Feng, who runs a bitcoin mine holding over 20,000 units of Antminer T9, lured by the extremely cheap electricity (as cheap as $0.006) in Iran, is among the first batch miners heading for the oil-rich Middle East country.
More than 90% of Iran’s electricity is generated by the abundant clean natural gas there. In the meanwhile, the Persian gas-rich country provides preferential policies for power stations.
“If you want to invest in power plants in Iran, the government there will supply free natural gas for the first five years, which further lowers the electricity cost,” said Liu Feng, “Gasoline costs only 0.6 yuan ($0.09) per liter and diesel 0.4 yuan ($0.06) per liter. Labor cost is also quite cheap.”
This makes Iran the paradise of crypto mining. But as attractive as it seems, the journey to setting up mines in Iran does not turn out to be a simple one.
“Because of the country’s huge electricity subsidy, the government has added this energy-hungry device to the list of 2,000 banned shipments to come in.”
Border security has not stopped Liu from importing miners into Iran. With the help of some agent who declares miners as computer processors, his first batch – 3,000 T9 miners – successfully crossed the border.
“But the risk of miners being detained and confiscated at the border is quite high. It’s said that Iranian customs have so far confiscated at least 40,000 crypto mining rigs of varied models.”
While it’s not just border security that is proving to be barriers to miners like Liu, crossing the border is only the first step in the long march. To set the foothold in a completely unfamiliar environment is another challenge.
“I found a power plant and they could offer electricity at 0.06 yuan ($0.009) per kilowatt-hour. After deducting the operation costs, we agreed on a 70/30 profit split. But two months later, the power plant claimed a 50/50 split and doubled the electricity price offer.”
Liu’s first attempt in Iran ended up with quickly reselling his mining machines. Months later, he found a local steel plant with a friend’s help. The steel industry itself consumes vast electricity, the electricity his 3,000 mining rigs consume is a drop in the bucket. But it was soon reported by local residents for the noise made from those mining rigs, and all his miners got confiscated this time.
The situation is changing however, according to He, a Chinese director of a big company in Iran.
“At present, only in Iran’s bonded zone could miner import/export be compliant and tariff-free.”
The establishment of the cloud computing industrial park within the bonded zone has received support from the Iranian president.
“Mining investors need to pay a certain amount of refundable electricity deposit to the Iran’s state grid. Small and medium-sized miners could apply to enter the industrial park in group.” He said.
“With nearly 900 megawatt of power, the cloud computing industrial park can hold 500,000 to 600,000 mining machines, possibly the largest mining farm.” According to He, there’re currently over 10,000 rigs operating in the park.