As Tehran Seeks Crypto Mining Dominance Iran One-Ups the United States
Where is Iran headed? What are they targeting in crypto mining? How is the bitcoin price affected?
The First Step Ahead
As the country moves forward with a national strategy for cryptocurrency mining, Iran’s government OKs power plants mining crypto.
In Iran, as the crypto mining is set to become even bigger with the government giving the green light for power plants thereby to mine cryptocurrencies similar to bitcoin. As of the last year, the news is the latest piece of positive development on the virtual currency mining front to come out of the country
Iranian authorities have sought to ensure market participants operate only after obtaining required licenses since legalising crypto mining back in July 2019. Iran is joining other emerging hubs as the global hash wars gathering pace by allowing power plants to engage in cryptocurrency.
Catapulting the country to be one of the more significant crypto mining nations outside of China, Iran has seen an influx of miners because of the cheap electricity. With multiple inventory acquisitions over the past few months, the major market participants in North America are expanding.
There Is Only Licensed Crypto Mining
To mine cryptocurrency, the Iranian authorities have given the go-ahead for power plants. Thereby this authorisation comes with a caveat where the power plant operators cannot use subsidised fuel. To mine bitcoin, the Iranian power plants must obtain a license from the government to use the approved electricity tariffs determined by the authorities.
A measure taken by the government to ensure that such activities do not negatively impact the supply of electricity to residents including other industrial sectors in the country is not allowing power plants to use subsidised fuel. Saying that this news marks another milestone for legalised crypto mining in Iran, Babak Behboudi the co-founder of the digital asset trading platform SynchroBit Hybrid Exchange holds it as a great achievement thereby indicating the Iranian government with the recognised crypto mining industry as a fact meaning that it is considered as a legal as well as regulated asset by which those people are sure to do something for their businesses and their life.
Emphasising licensed crypto mining is not a new development by Iranian authorities as of January has issued over 1000 licenses for cryptocurrency mining according to the Ministry of Industry, Mine, and Trade. Some miners moved their operations to mosques before legalisation to enjoy free electricity prompting a government crackdown due to spikes in energy consumption.
With the government allowing crypto mining, a compromise was soon found incentivising more participants to move their operations to the country with the promise of tax holidays. Eligible for certain tax exemptions is the Iranian cryptocurrency miners repatriating their foreign earnings to the country. The government has also offered rewards for whistle-blowers as part of their campaign to only allow licensed crypto mining exposing illegal cryptocurrency mining activities with bounties of about 100 million rials equal to $ 2,375.
Now Iran’s Government Sets The Agenda
Iran’s President Hassan Rouhani in May called the officials at the Central Bank of Iran, Ministry of Energy as well as the Ministry of Communications and Information Technology thereby developing a comprehensive national strategy for crypto mining. To include cryptocurrency mining in its economic recovery plans, was the move signaling greater intent by the government. A struggling economy made even worse by the coronavirus outbreak, the country along with facing hyperinflation saw the Iranian government increasingly examining the merits of greater involvement as the country’s crypto industry.
Iran has the lowest electricity rates in the world along with Egypt, Kuwait, and Myanmar. For miners with healthier bottom lines, cheap electricity is often an incentive. Iran controls the fifth-largest share of global Bitcoin mining hash rate distribution outside of China. Leading to a slight decline in clean-energy crypto mining is indeed Iran’s rise in crypto mining activities in 2019.
Who Is Challenging China’s Dominance?
Resulting in a larger share of the global hash rate distribution, the power plants in Iran engaging in crypto mining is set to increase the country’s Bitcoin mining footprint. Iran ranked ninth in the world in thermal power generation capacity as of August 2019 with a rapid increase of 9,000 megawatts happening over a six-year period.
As participants in other major crypto mining hubs appear to be upscaling their operations, the news comes that major North American miners similar to Bitfarms as well as Marathon are sure to have made sizable orders for mining rigs from the major manufacturers like the MicroBT and Bitmain that was in the past few months.
Containing the latest iteration of mining hardware, touted as being able to deliver far greater levels of productivity than the older generation of rigs are these new inventories. In the present climate, highly efficient crypto mining is even more of concern, especially after the May Bitcoin block reward halving.
Bitcoin mining seems to be attracting government interest in Kyrgyzstan as the country’s Ministry of Economy earlier in August released the public discussion a draft plan imposing a tax rate of 15% on the bitcoin miners. It comes as a move to thereby stimulate the economic recovery by the government amid the current COVID-19 pandemic.
Countries such as Iran is looking to compete with the United States in a hash war for Bitcoin permabulls. It was observed by crypto bull Max Keiser that the tussle thereafter catapults Bitcoin to the market price of $500,000. Causing a significant decrease in China’s Bitcoin mining hash rate dominance is the migration of hash power from East to West.
Moving away from Europe’s high operating costs, the western miners could relocate to North America as the US comes emerging as a viable option due to developments in regulation by several states.
Finally, How Is COVID-19 And Bitcoin Halving Related?
China still dominates the industry for now controlling 65% of the hash rate. Pundits expect miners to see even greater profitability with the monsoon season underway in China as electricity becomes abundant.
The industry has been forced to weather multiple storms in 2020 including the COVID-19 pandemic affecting the supply of hardware to miners while the spot market price following the bitcoin halving has failed to see the upward push forcing the smaller mining operations to shut down. The global business director at Bitcoin mining pool operator F2Pool Thomas Heller thereby revealed all the effects of the halving as:
Dropping from ~$0.16 per TH/s the daily mining revenue has pre-halving to $0.07 in July and now around $0.10. Except for those taking advantage of cheap Hydro Season power prices in China, profit margins are much thinner and many old-gen machines have turned off.
The Concluding Words From Experts
Furthermore, Whit Gibbs the CEO of crypto mining firm called Hashr8 has echoed the similar sentiments that have been post-halving that was brutal :
You are directly impacting a miner’s bottom line obviously anytime you have the block reward and he continues that adding to the fact that despite months of sideways price action it was also seen as a steady increase in the difficulty as It was not a nice few months for those bitcoin miners. Rage bound sideways accumulation also played a big part according to Heller:
Compared to the 12 months earlier, due to the bitcoin price, there has been much less demand for new-gen machines whereas a few companies in the US as well as abroad made the large orders from MicroBT as also Bitmain as they weren’t expecting huge increases in network hash rate due to slowish sales.