Bitcoin mining has been an industry since its inception. It allows miners to generate income by solving difficult mathematical problems on their computers. Iran is no exception – it’s rich in resources and home to some talented programmers who have taken up Bitcoin as their cause célèbre.
The “Iran on cryptocurrency” is a story that discusses the Iranian Bitcoin mining industry. This article details how Iran has tried to clamp down on cryptocurrency but failed.
ViraMiner Iran is a company that develops and operates Bitcoin mining facilities. It has two offices located in Tehran’s western part, in separate buildings.
On a Monday afternoon, Magazine’s old office is bustling. The current location is primarily focused on providing repair services.
Mining equipment is stacked on top of each other on yellow, green, and red shelves that face the company secretary’s desk. Gadgets can be found unlocked in a busy repair room located across the door. Control boards, power supply and hash boards are discussed and adjusted.
This firm, which employs mostly young computer enthusiasts, is specialized in Bitmain Antminer repair and MicroBT Whatsminer repair. Mina Jahanbakhshi is one of three women who work there. She takes me through the office and leads me to a repair area. Here, new staff are being trained to meet the growing demands of the company.
A presidential prohibition on power-intensive crypto mining was just removed, and electricity use peaked in Iran’s sweltering summer. Accordingly, the organization is anticipating a busy period.
As the additional mending gear has yet to arrive in the room, white desks have been placed against the wall near the end.
“Right now, there’s a two-week backlog for equipment repairs,” she explains. “We’re hiring more people to help speed up the repair process.”
Iran’s mining industry has risen tremendously in recent years.
“More people are becoming aware of mining,” Jahanbakhshi adds. “It’s a fascinating and appealing field.” It’s on the rise all throughout the globe, and Iran is no exception.”
ViraMiner is an Iranian corporation. (Supplied)
A small group of people
Another evidence of a rising business is the company’s plans to open a second office in a neighboring building. The workplace is still under construction smells of paint.
Omid Alavi (CEO of ViraMiner) is just a few steps away from workers plastering the walls.
We can’t have an interview since there’s nowhere to do so, so we transfer to a nearby apartment where another company’s office is being set up. Alavi jokes with his coworkers in the next office. Someone who isn’t acquainted with their connection could think the two offices are part of the same firm.
As we pass by a desk opposite the door, Alavi jokes, “These are our competitors.” “There is a very little crypto community.”
Magazine is told by Alavi that he and two other partners founded the firm in 2016.
“The Bitcoin craze gained traction in 2017-2018. Many people became interested in bitcoin which led to many Iranian mining farms. We focused on the upkeep and setup of the farms. In general, we developed a specialist firm in this field.”
ViraMiner has seen a steady growth over the past few years, despite some downs.
“In the last four to five years, our workforce has grown to approximately 70 people.” He explains, “We developed a specialist repair services section, where 16-17 trained professionals fix mining equipment.”
“We had several of our employees take training at Bitmain Technologies Ltd and MicroBT in China. We also brought in Chinese specialists to teach our workers.”
ViraMiner began as an underground mining company. Alavi and his coworkers were given licences to operate in the region after mining became an industry recognized by the government in 2019.
“At the same time, we’ve sought to assist the government in developing mining legislation,” he adds.
According to the Iranian Mining Association (IMA), two-thirds Bitcoin mining in Iran remains unlicensed.
Bitcoin mining is a major business in Iran.
Supervision by government
Iran is believed to account for between 4.5 and 7% of the global Bitcoin hash rate. The Iranian government has increased its mining monitoring due to the industry’s broad reach.
The government, on the other hand, is concerned about the business since it consumes Iran’s highly subsidized power and there is a nagging suspicion that illicit miners are dodging taxes and tariffs.
The government expressed willingness to use mining to partially compensate for an almost total embargo on its banks and oil sectors due to international sanctions.
Elliptic, a blockchain analytics business, estimated in May that Iran’s Bitcoin manufacturing brought in close to $1 billion per year at the time.
Abdonasser Hemmati was the former governor of Iran’s Central Bank (CBI) and stated that allowed farms would need to deposit their Bitcoins on CBI approved exchanges. The importer may then use Bitcoin to pay for goods purchased from suppliers overseas.
Despite numerous attempts to improve transparency and efficiency of legislation, mining companies are still not satisfied with the current restrictions.
Miners claim that the government’s pricing plan, which pays the export price for power, is unfair and makes mining in Iran less appealing.
Miners claim that regulations are vague and ineffective, particularly the ones recommended by CBI.
“The government hasn’t built operational infrastructure for this yet,” Alavi adds.
According to Shijieshuo, Iran banned all local Chinese Bitcoin mining companies with valid permits on January 14. According to Shijieshuo data, Iran holds 8% of all global Bitcoin holdings, just behind China and the United States. pic.twitter.com/fT7S9xrHPz
January 15, 2021 — Wu Blockchain (@WuBlockchain)
“Bitcoin miners have two alternatives under federal law. They claim that either you may import things under the control of the Central Bank and avoid paying taxes, or you must pay taxes if you want to maintain your Bitcoin — despite the fact that tax rules for mining are also ambiguous.”
According to Javad, a mining specialist based in Tehran, clear laws are critical for the expansion of Iran’s mining sector. Although he requests anonymity as speaking to the international media in Iran is a security threat, Javad is a hardware engineering with five years’ experience in mining.
“In countries like Iran, where income per capita is very low and there is a fight with high inflation, mining is highly appealing in terms of revenue,” he explains.
“The function of rules is critical in ensuring the industry’s stability and preventing it from drifting into the shadows.” Miners would be prepared to come out of the shadows if there were rules that benefitted both the government and the enterprises. Though, for the time being, the Energy Ministry has a one-sided perspective on the matter.”
He believes the government will see the sector’s potential for providing employment and wealth in Iran’s struggling economy.
“Iran might employ bitcoin mining to dodge sanctions.” However, if we want to make use of this potential, we must fully embrace it. It implies that, in the event that foreign mining pools decide to restrict Iranian miners, Iran should have the necessary rules in place to construct domestic mining pools,” he argues.
“If Iran wishes to utilize Bitcoin’s network for national interest transactions, it must pay particular attention to mining and make specific local changes.”
View of Tehran’s skyline
Massive crackdowns are underway
Despite the government’s newfound interest in locally mined Bitcoin, Iran’s weak power infrastructure has led it to disconnect farms under its supervision on a periodic basis.
Due to widespread power outages, the government banned crypto mining for nearly four months in May.
This led to a decrease in income for many mining companies, including ViraMiner.
“For four months, we fell into seasonal hibernation,” Alavi laughs. “We didn’t get much money from unlicensed miners either since the authorities placed so much pressure on them and they were generally frightened away.”
According to Iran’s State News Agency IRNA, which cites the state-owned Iran Grid Management Company, Iranian police have confiscated 221,390 mining equipment so far.
According to the research, the power consumption of the miner confiscated would have been 624.7 megawatts.
Iran’s energy consumption is expected to peak at 66 gigawatts this summer, according to the Energy Ministry. This is far more than the country’s current electricity generating capacity of 55 gigawatts.
According to the Iran Blockchain Association, total mining will not exceed 1 gigawatt. This includes illicit mining of over 600 megawatts, and permitted farming of over 300 megawatts.
“Mining contributes for less than 10% of Iran’s electrical problems and blackouts,” Javad argues.
“The Energy Ministry has been unable to expand the number of power plants it operates. This should have happened as part of a strategy to increase power generating capacity to keep up with yearly increases in home and industrial energy usage.”
He claims that the mining industry has been used as a scapegoat to blame government incompetence and weak electricity infrastructure.
“Many private power plants have been unable to perform routine maintenance and overhauls on their aging equipment. This is because their payments have been late for a long time,” he adds, referring to state payments. “As a result, they can’t work at full capacity.”
It is not easy to trace.
While authorities have concentrated their efforts on large farms operating at industrial and agricultural sites, small-scale mining has had a better chance of slipping under the government’s radar.
Particularly home miners are more difficult to locate.
Iran’s electricity use is a serious concern.
Many Iranians have been trying to set up a few mining devices at their homes in recent years to supplement their income during times of economic hardship or significant unemployment.
According to Iran’s Moj News Agency, home mining accounted for 2% of all unlawful mining in Iran in 2019. The percentages rose to 6% in 2020 and 12% in 2021.
“I utilized my miner at home for over six months,” Hoda, a miner from Tehran, told Magazine.
The 28-year old art graduate makes handcrafted pottery and ceramics for a living.
“I don’t believe the authorities will be able to track down one or two miners who have opened up shop at home,” she adds. “I’ve been able to mine 0.1 Bitcoin thus far, and I want to keep going.”
“It is lucrative, certainly,” says Mostafa, who has been mining Bitcoin in his Tehran flat. “Both the worth of the equipment and the price of Bitcoin go rise with time.”
“However, due of the loudness and heat it produces, it is impossible to do this at home.” It has the potential to be really irritating.”
Both respondents requested anonymity because of concerns regarding the illegal nature and extent of Iranian mining.
Mostafa stated that crypto mining and trading would eventually be recognized by the government.
“No matter how much you fight technology, you’ll always lose. The government must accept cryptography. It can generate income. “Many nations are using cryptocurrency to compensate for some of their economic issues,” he argues.
Twelve million traders are employed.
Despite earning from cryptocurrency mining and selling his generated Bitcoin on Iranian internet exchanges, Mostafa is concerned about the companies’ sloppy operations in Iran.
“At one point, one of the exchanges went out of business. They stole money from people. He adds, “I don’t know where its office was.”
“These exchanges aren’t very trustworthy.” When you go to their website, you’ll see that just a handful of them include an address or a phone number.”
The number of Iranian online cryptocurrency exchanges has increased significantly, along with the increasing number of Iranians investing into cryptocurrencies.
A May research found that approximately 12 million Iranians have made cryptocurrency investments out of an estimated 85 million people. The report shows that 62% of investors joined six months prior to the survey when cryptocurrencies were rising in value.
According to Mohsen (an Iranian trade specialist), one reason for cryptocurrency investing is the involvement of the epidemic, as well as the closing of many small businesses.
“As sanctions limit Iranians’ access to other foreign financial markets,” he argues, “crypto has become the most accessible market for them.”
Iran’s terrible heat waves have passed, and the country’s electrical system has stabilized, thus new President Ebrahim Raisi has removed the country’s three-month ban on crypto mining. https://t.co/0WopuVyAaa
1 October 2021 — Cointelegraph (@Cointelegraph)
“Many people join the cryptocurrency market during a bull run and get a Wolf of Wall Street vibe. However, I believe that people will forget about crypto in the end since they are largely unfamiliar of the intricacies of trading.”
He expresses skepticism about the government’s ability to create effective trade laws.
“Crypto might be a stepping stone for Iran’s economy,” says one analyst. “However, since our regulatory structure is inadequate, this chance will finally be squandered,” he warns.
Alavi, the CEO at ViraMiner cuts short my conversation.
The workplace atmosphere has improved. Half-jokingly, he complains about the chat on the phone and hangs up after a mere ten minutes.
“Nothing goes according to plan in the mining sector.” Seriously. “I haven’t done a single job that was orderly, systematic, or standard in the last four to five years,” he adds.
“The mining industry is constantly rushing. Investors want the rigs to be switched on immediately and the farm running as fast as possible. Network problems could suddenly cause a sudden rise in revenue, which can lead to a loss of revenue. “Your company strategy is in a state of flux.”
Investors from Iran and abroad have invested a lot in the mining sector.
China owns the majority of Iran’s biggest farms. They are located in Free Economic Zones where they are exempt from tariffs and taxes.
Iran’s largest farm, constructed by the Iran and China Investment Development Group, is located in a free zone in Kerman Province’s south. According to the company’s website, it’s a 200-megawatt farm with a 2,000,000 terahash data center and 70,000 ASIC miners.
According to Alavi, the Chinese have built a 30-40 megawatt farm in Maku FEZ in Iran’s northern area, followed by smaller 4 to 5-megawatt farms.
He estimates that between $180 million and $220 million have been spent on legal mining in Iran. However, the potential amount of money that could be invested in this area is significantly greater if there are no government restrictions.
“There are a few weaknesses in the regulations governing the pricing of electricity. One is that the government set the export price on the basis of the cost of mining power. We believe this is too high. The relationship between electricity prices and the exchange rate between USD and rial is another. According to the government’s directives, if the rial’s value versus the US dollar varies by more than 10%, the price of electricity will vary as well,” he adds.
“Investors are concerned as a result of this. Due to the steady rise in dollar value versus the rial, the price of electricity has continued its climb. As an investor, it’s not a reliable element to take into your calculations. As a result, significant investors avoid investing in this area.”
Even Bitcoin’s rising value may not be enough to protect investors from losing money. Any profit might be wiped out by a rise in the price of exported power owing to the rial’s depreciation.
“Whenever crypto prices rise, the value of the rial falls, resulting in an increase in the cost of electricity.” Since the beginning of the year, the cost of power has increased. We used to offer $0.04-0.05 per Kilowatt. Now we offer $0.07-0. “This makes investors nervous,” he adds.
Alavi is disappointed with Iran’s current state of sanctioned mining, but he remains optimistic about the future.
“I don’t believe Iran will be able to pay the expenses of going underground with crypto assets.” As a result, adequate rules will be created for them,” he argues.
You can watch this video
The “bitcoin $30k support” is the price of bitcoin that was predicted by some analysts. This article will explain what would happen in the event that this prediction is true.
- Proposed bill in Iran could ban all foreign-mined cryptocurrency
- Binance and sepa
- bitcoin next support level
- Bitcoin will be overtaken by dogecoin
- Crypto backwards