The escalated government crackdown on digital currency and its production process has resulted in several Chinese crypto miners migrating to places with favorable policies and low-cost electricity.
With spiking electricity bills and the rapid downfall of Bitcoin prices late last year, Chinese mining investors seek alternative locations to sustain their businesses. The country’s stricter crypto mining regulations urged them to speed up their relocation.
Giant miners transfer their operations abroad, with the US, Iceland, and Canada among their top destinations, while many small- and medium-sized ones turn to Cambodia, Vietnam, and Thailand in Southeast Asia for geographical proximity.
Iran has also been a hotspot for Chinese miners since late 2018. The nation attracts an increasing number of Bitcoin miners because of its cheap electricity that costs as low as $0.006 per kilowatt-hour.
The electricity generated by the hydropower stations within China’s southwestern region often costs roughly $0.015 per kilowatt-hour during summer’s high water period and triples to $0.04 per kilowatt-hour in winter.
Liu Feng, who operates a Bitcoin mine holding more than 20,000 Antminer T9 units, was lured by Iran’s low-cost electricity and is among the first batch miners heading for the nation.
Over 90% of Iran’s power is produced by the abundant natural gas there. The oil-rich Middle East 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,” Feng stated. “Gasoline costs only 0.6 yuan [$0.09] per liter and diesel 0.4 yuan [$0.06] per liter. [The] labor cost is also quite cheap.”
That makes the nation a crypto mining paradise, but the journey to setting up mines is not easy. “Because of the country’s huge electricity subsidy, the government has added this energy-hungry device to the list of 2,000 banned shipments,” Feng noted.
Border security has not hindered Liu from bringing miners into Iran. His first batch—3,000 T9 miners—have successfully crossed the border, thanks to some agents who declared miners as computer processors.
“But the risk of miners being detained and confiscated at the border is quite high,” he stated. “It’s said that Iranian customs have so far confiscated at least 40,000 crypto mining rigs of varied models.”
Aside from border security, another challenge is setting up a foothold in an entirely unfamiliar environment.
“I found a power plant and [it] could offer electricity at 0.06 yuan [$0.009] per kilowatt-hour,” Feng detailed. “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.”
His first attempt in the country ended immediately and he resold his miners. Months after, Feng found a local steel plant. The steel industry consumes massive electricity and the power consumption of his 3,000 mining rigs in comparison is a drop in the bucket. However, local residents reported the noise made from the mining rigs, resulting in the confiscation of all of his miners.
But the situation is changing, per the director of a giant Iranian company. “At present, only in Iran’s bonded zone could [a] miner import/export [and remain] compliant and tariff free,” the director noted.
The cloud computing industrial park’s establishment in the bonded zone has gained support form Iran’s president.
“Mining investors need to pay a certain amount of refundable electricity deposits to Iran’s state grid,” the director stated. “Small- and medium-sized miners could apply to enter the industrial park in [a] group … With nearly 900 megawatts of power [available], the cloud computing industrial park is estimated to hold 500,000 to 600,000 mining machines, possibly [making it] the [world’s] largest mining farm.”
The director said there are more than 10,000 rigs operating in the park today.