{"id":496,"date":"2021-12-21T18:58:53","date_gmt":"2021-12-21T18:58:53","guid":{"rendered":"http:\/\/cryptoheretostay.com\/?p=496"},"modified":"2021-12-21T18:58:54","modified_gmt":"2021-12-21T18:58:54","slug":"inside-the-iranian-bitcoin-mining-industry-cointelegraph-magazine","status":"publish","type":"post","link":"https:\/\/cryptoheretostay.com\/?p=496","title":{"rendered":"Inside the Iranian Bitcoin mining industry \u2013 Cointelegraph Magazine"},"content":{"rendered":"<script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"crypto\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script>\n<p><strong>ViraMiner is an Iranian company that sets up Bitcoin mining farms and maintains them. It has two offices in western Tehran, located in separate adjacent buildings.<\/strong><\/p>\n<p>When Magazine visits, its old office is busy on a Monday afternoon. This place is now officially dedicated to its repairing services alone.<\/p>\n<p>Mining devices are stored upon each other in yellow, green and red shelves raised against a wall facing the company secretary\u2019s desk. Across the entrance, there is a busy repair room where devices are opened. Power supplies, hash boards and control boards are passed around, discussed and modified.<\/p>\n<p>Bitmain Antminer and MicroBT Whatsminer are a specialty for repairs by the company, whose personnel are all young tech enthusiasts. Mina Jahanbakhshi, one of the three female employees present there, gives a tour around the office and leads me to a room next to the repair section, which is being prepared for new employees who have been hired to help the company keep up with its growing demand.<\/p>\n<p>Electricity consumption peak in Iran\u2019s hot summer has just passed and a presidential ban on power-intensive crypto mining has recently been lifted. The company, therefore, expects busy days ahead.<\/p>\n<p>White new desks are put next to a wall toward the end of the quiet room and the extra repairing equipment has yet to arrive.<\/p>\n<p>\u201cThe waiting period for repairing equipment is currently two weeks,\u201d she says. \u201cWe are adding new personnel to speed up the repairing process.\u201d<\/p>\n<p>Mining has grown significantly in Iran over the past few years.<\/p>\n<p>\u201cPeople are getting more familiar with mining,\u201d Jahanbakhshi says. \u201cIt\u2019s an interesting and attractive field. It is growing worldwide, and likewise in Iran.\u201d<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>ViraMiner is an Iranian company. (Supplied)<\/p>\n<p>\u00a0<\/p>\n<p>Small community<\/p>\n<p>As another sign of a growing business, the company is preparing an additional office in a separate building nearby. The air in the under-construction workplace is teeming the odor of fresh paint.<\/p>\n<p>Omid Alavi, ViraMiner\u2019s CEO, is having a meeting a few steps from construction workers doing plasterwork on the walls.<\/p>\n<p>There is no place to have an interview, so we move to the neighboring apartment where an office for another company is being prepared. Alavi exchanges a few jokes with the people in the neighboring office. A person unfamiliar with their relationship would assume the two offices belong to the same company.<\/p>\n<p>\u201cThese are our competitors,\u201d Alavi says jokingly as we walk past a desk across the entrance. \u201cThe crypto community is really small.\u201d<\/p>\n<p>Alavi tells Magazine that he established the company with two other partners back in 2016.<\/p>\n<p>\u201cIn 2017-2018, the Bitcoin hype gained momentum. Many got interested in cryptocurrency and this led to the building of many mining farms in Iran. We put our focus on the setting up and the maintenance of the farms. We generally became a specialized company in this sector.\u201d<\/p>\n<p>Despite ups and downs, ViraMiner has seen overall growth in recent years.<\/p>\n<p>\u201cIn the past four to five years, the number of our personnel has increased to nearly 70. We created a specialized repair services unit, where 16-17 trained personnel repair mining equipment,\u201d he says.<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u201cWe had some of our staff do courses in China\u2019s Bitmain Technologies Ltd and MicroBT. We also invited experts from China to train our staff here.\u201d<\/p>\n<p>ViraMiner was initially established as an underground company. But, in 2019, when mining was recognized by the authorities as an industry, Alavi and his colleagues received permits to be an authorized company active in the field.<\/p>\n<p>\u201cSimultaneously, we have tried to help the government make regulations for mining,\u201d he says.<\/p>\n<p>According to the Iranian Mining Association, two-thirds of Iran\u2019s Bitcoin mining is unauthorized.<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>Bitcoin mining is big business in Iran.<\/p>\n<p>\u00a0<\/p>\n<p>Government supervision<\/p>\n<p>Iran accounts for an estimated 4.5% to 7% of the global Bitcoin hash rate. The extensive reach of the industry has prompted the Iranian government to increase its supervision of mining.<\/p>\n<p>However, the government has concerns with the industry due to the sector\u2019s consumption of Iran\u2019s heavily subsidized electricity, as well as a sneaking suspicion that illegal miners are evading taxes and duties.<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>Moreover, the government has shown a desire to turn mining into an opportunity to compensate, at least in part, for an almost-complete embargo on its banking and oil industries due to international sanctions.<\/p>\n<p>Blockchain analytics firm Elliptic said in May that Iran\u2019s Bitcoin production had hit revenues close to $1 billion a year at the country\u2019s then-level of mining.<\/p>\n<p>The former head of the Central Bank of Iran (CBI) Abdonasser Hemmati said in March that authorized farms will need to deposit their mined Bitcoin on exchanges specified by the CBI. Importers can then use Bitcoin as a source of foreign currency to pay for the goods purchased from overseas sellers.<\/p>\n<p>But, despite many efforts to make laws efficient and clear, the regulations have still failed to satisfy mining businesses.<\/p>\n<p>Miners complain that the government\u2019s tariff scheme \u2014 paying the export price for electricity \u2014 is unreasonable and that it makes mining less attractive in Iran.<\/p>\n<p>Regulations, especially those proposed by the CBI, are unclear and not yet operational, miners say.<\/p>\n<p>\u201cSo far, the government hasn\u2019t created operational infrastructures for this,\u201d says Alavi.<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p lang=\"en\" dir=\"ltr\">According to Shijieshuo, Iran has halted all local Chinese Bitcoin mining companies that hold legal licenses on January 14. According to statistics from the Bitooda website, Iran is the third largest Bitcoin holder in the world after the United States and China, 8% of total. pic.twitter.com\/fT7S9xrHPz<\/p>\n<p>\u2014 Wu Blockchain (@WuBlockchain) January 15, 2021<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u201cThe government legislation puts forth two options for Bitcoin miners. They say either you can import products under the supervision of the Central Bank and be exempt from taxes or if you want to keep your Bitcoin, you need to pay your taxes \u2014 even though tax instructions for mining are unclear, too.\u201d<\/p>\n<p>Javad, a Tehran-based mining expert, tells Magazine he believes that clear regulations are crucial for the growth of the mining industry in Iran. He requests anonymity due to security concerns in Iran over speaking to foreign media, but he\u2019s a hardware engineer with five years of experience in Iran\u2019s mining industry.<\/p>\n<p>\u201cMining is very attractive in terms of its revenue in countries like Iran, where income per capita is relatively low and there is a struggle with a high inflation rate,\u201d he says,<\/p>\n<p>\u201cThe role of regulations is utterly important to assure the robustness of the industry and to keep it from slipping into the shadows. If we have regulations that are a win-win for both the government and the businesses, miners would definitely be willing to come out of the shadows. Though, at the moment, the Energy Ministry has a one-sided view of this issue.\u201d<\/p>\n<p>He hopes that the government would recognize the potential in the sector for creating jobs and prosperity in Iran\u2019s ailing economy.<\/p>\n<p>\u201cBitcoin mining could be used by Iran to evade sanctions. But, if we decide to use this potential, we need to accept it completely. It means that Iran should have the required regulations to create domestic mining pools in case international pools decide to block Iranian miners,\u201d he says.<\/p>\n<p>\u201cIf Iran wants to use transactions on Bitcoin\u2019s network in favor of its national interest, it needs to pay special attention to mining and make certain local rearrangements.\u201d<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>Part of the Tehran city skyline<\/p>\n<p>\u00a0<\/p>\n<p>Massive crackdown<\/p>\n<p>Despite the government\u2019s newly found use for domestically mined Bitcoin, Iran\u2019s poor power infrastructures have forced it to seasonally unplug farms that are on its watch.<\/p>\n<p>In late May, authorities banned crypto mining for nearly four months as the country faced major power cuts in many cities.<\/p>\n<p>This led to a drop in revenue for many mining businesses, including that of ViraMiner.<\/p>\n<p>\u201cWe went into seasonal hibernating for four months,\u201d Alavi says laughing. \u201cWe didn\u2019t have much revenue through unauthorized miners either because the government was putting so much pressure on them and they were mostly scared off.\u201d<\/p>\n<p>So far, Iranian authorities have seized 221,390 mining devices according to Iran\u2019s State News Agency IRNA, citing the state-owned Iran Grid Management Company.<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>The report said that the seized miners would have consumed 624.7 megawatts of electricity.<\/p>\n<p>The Energy Ministry says Iran\u2019s electricity consumption can hit a peak of 66 gigawatts in the summer. This is much higher than the country\u2019s 55-gigawatts power generation capacity.<\/p>\n<p>Meanwhile, according to Iran\u2019s Blockchain Association, the overall mining consumption could be less than 1 gigawatt. This includes more than 600 megawatts consumed by unauthorized mining alongside more than 300 megawatts related to authorized farms.<\/p>\n<p>\u201cMining accounts for less than 10% of electricity issues and power cuts in Iran,\u201d Javad explains.<\/p>\n<p>\u201cThe Energy Ministry has not been able to increase the number of its power plants. This should have taken place as part of a plan to raise power generation capacity to keep pace with annual growth both in domestic and industrial electricity consumption.\u201d<\/p>\n<p>He says that the mining industry has become a scapegoat for poor power infrastructures, as well as mismanagement on the part of the government.<\/p>\n<p>\u201cMany private power plants have not been able to undertake maintenance and overhaul operations on their worn-out facilities. This is because their payments have been long overdue,\u201d he says, referring to payments due from the state. \u201cSo, they are not able to operate at full capacity.\u201d<\/p>\n<p>Difficult to trace<\/p>\n<p>While authorities have focused on big farms operating at industrial and agricultural facilities, small-scale mining has had much of a chance to evade the government\u2019s radars.<\/p>\n<p>Home miners, in particular, are more difficult to trace.<\/p>\n<p>Electricity consumption is a big issue in Iran.<\/p>\n<p>Many Iranians have tried, in recent years, to set up one or two mining devices at home to be able to earn extra income at a time of economic hardship and high unemployment.<\/p>\n<p>In 2019, home mining accounted for 2% of total unauthorized mining in Iran, according to Iran\u2019s Moj News Agency. The number rose to 6% and 12% in 2020 and 2021, respectively.<\/p>\n<p>\u201cI used my miner for nearly six months at home,\u201d Hoda, a Tehran-based miner, tells Magazine.<\/p>\n<p>The 28-year-old art graduate makes handmade ceramics and pottery for a living.<\/p>\n<p>\u201cI don\u2019t think the government can trace one or two miners set up at home,\u201d she says. \u201cI\u2019ve been able to mine 0.1 Bitcoin and I\u2019m planning to continue.\u201d<\/p>\n<p>Mostafa, who has been mining Bitcoin at his apartment in Tehran, says: \u201cIt is profitable, indeed, because both the value of the equipment and the price of Bitcoin go up over time.\u201d<\/p>\n<p>\u201cBut, it is difficult to do this at home because of the noise and the heat that it gives off. It could really become annoying.\u201d<\/p>\n<p>Both interviewees wanted their last names undisclosed due to concerns over the illegal nature of mining in Iran.<\/p>\n<p>Mostafa says that the government would finally need to accept crypto mining and trading as legal businesses.<\/p>\n<p>\u201cNo matter how much you confront technology, you\u2019ll lose anyway. The government has to come to terms with crypto. It helps create revenue. Many countries are compensating for some part of their economic difficulties with crypto,\u201d he says.<\/p>\n<p>12 million traders<\/p>\n<p>Despite profiting from crypto mining and having sold his mined Bitcoin on Iranian online exchanges, Mostafa expresses concern over lax operations of exchanges in Iran.<\/p>\n<p>\u201cOne of the exchanges shut down its business a while ago. They stole people\u2019s money. I don\u2019t know where its office was,\u201d he says.<\/p>\n<p>\u201cYou can\u2019t really trust these exchanges. If you go to their website, few of them have an address or a telephone number.\u201d<\/p>\n<p>The number of Iranian online exchanges has risen significantly alongside the growing number of Iranians investing in cryptocurrencies.<\/p>\n<p>A study published in May said that nearly 12 million Iranians, out of a population of 85 million, had invested in crypto. It said 62% of the investors entered six months prior to the study when cryptocurrencies were seeing an increase in value.<\/p>\n<p>Mohsen, an Iranian trading expert, emphasizes the role of the pandemic and the shutting down of many small businesses as reasons for public attention toward investment in cryptocurrencies.<\/p>\n<p>\u201cCrypto has been the most accessible market for Iranians as sanctions restrict their access to other international financial markets,\u201d he says.<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p lang=\"en\" dir=\"ltr\">Iran\u2019s severe heat waves have ended and the electricity grid has stabilized, so new President Ebrahim Raisi has lifted a 3-month ban on crypto mining in the country. https:\/\/t.co\/0WopuVyAaa<\/p>\n<p>\u2014 Cointelegraph (@Cointelegraph) October 1, 2021<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u201cMany enter the crypto market during a bull run and get a Wolf of Wall Street kind of impression. But, I think people would not have a good memory of crypto in the end, as they are mostly unaware of the technicalities of trading.\u201d<\/p>\n<p>He expresses doubts about the possibility of the government creating effective regulations for trading.<\/p>\n<p>\u201cCrypto could be a stepping stone for Iran\u2019s economy. But, this opportunity will eventually go to waste because our regulating system is flawed,\u201d he says.<\/p>\n<p>Much greater potential<\/p>\n<p>My interview with Alavi, ViraMiner\u2019s CEO, becomes interrupted when he receives a phone call.<\/p>\n<p>The office is now quieter. It takes only a minute before he hangs up, complaining half-jokingly about the conversation that he had on the phone.<\/p>\n<p>\u201cIn the mining industry, nothing goes based on a plan. Seriously. In the past four to five years, I haven\u2019t done one single project that was orderly, routine and standard,\u201d he says.<\/p>\n<p>\u201cThe mining sector is always in a rush. The investor wants its rigs immediately turned on and they want the farm to start operating as soon as possible. This is because network difficulty might suddenly see an extreme surge and this could cause a drop in revenue. Your business plan is volatile.\u201d<\/p>\n<p>Much capital has, so far, been brought to the mining industry by investors in and outside Iran.<\/p>\n<p>Iran\u2019s largest farms are run through Chinese investment. They are set up in Free Economic Zones, where companies are offered exemption from taxes and duties.<\/p>\n<p>The biggest farm in Iran, established by Iran and China Investment Development Group, is based in a free zone in the southern Kerman Province. It is a 200-megawatts farm with a 2,000,000 terahash data center and 70,000 ASIC miners, according to the firm\u2019s website.<\/p>\n<p>A 30-40-megawatts farm set up by the Chinese in Maku FEZ in Iran\u2019s northwestern region comes next, followed by smaller 4 to 5-megawatts farms, according to Alavi.<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>He estimates that $180 million to $220 million has been invested in authorized mining in Iran, though the potential for investment is much higher if obstacles on the government\u2019s end are removed.<\/p>\n<p>\u201cRegulations related to the price of power have a few flaws. One of them is that the government set the export price as the price of electricity for mining, which we think is high. The other is the correlation between the price of power and the US dollar to rial rate. The government said in its instructions that, if rial\u2019s value against the US dollar fluctuates more than 10%, the price of power will change too,\u201d he says.<\/p>\n<p>\u201cThis causes investors to feel uneasy. Due to a continuous increase in the value of the dollar against rial, the price of power has kept rising. It\u2019s not a stable factor to include in your calculations as an investor. So, big investors never touch this sector.\u201d<\/p>\n<p>Even Bitcoin\u2019s increasing value could fail in shielding investors from losing profit. Any profit can be cut by a hike in the price of exported electricity due to a decline in the value of the rial.<\/p>\n<p>\u201cWhenever crypto prices increase, rial loses value, resulting in a rise in the cost of power. The price of electricity has risen since the beginning of this year. Previously we would give $0.04-0.05 per kilowatt, which has reached $0.07-0.08. This spooks investors,\u201d he says.<\/p>\n<p>Despite dissatisfaction about the circumstances that authorized mining is currently struggling with, Alavi says he is optimistic about mining\u2019s future in Iran.<\/p>\n<p>\u201cI don\u2019t think Iran will be able to afford the costs of crypto assets going underground. So, it will create proper regulations for them,\u201d he says.<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/><script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"bitcoin\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<br \/><a href=\"https:\/\/cointelegraph.com\/magazine\/2021\/12\/21\/iranian-miners-say-bad-regulations-killing-great-potential-in-industry\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>ViraMiner is an Iranian company that sets up Bitcoin mining farms and maintains them. It has two offices in western Tehran, located in separate adjacent buildings. When Magazine visits, its old office is busy on a Monday afternoon. This place is now officially dedicated to its repairing services alone. Mining devices are stored upon each [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":497,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_wp_rev_ctl_limit":""},"categories":[2],"tags":[],"class_list":["post-496","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bitcoin-news"],"_links":{"self":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/496","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=496"}],"version-history":[{"count":1,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/496\/revisions"}],"predecessor-version":[{"id":498,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/496\/revisions\/498"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/media\/497"}],"wp:attachment":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=496"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=496"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=496"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}