Cryptos in Iran and the influence of Chinese companies
By Tooba Moshiri, Iran
Perhaps the very low price of electricity in Iran has led to the presence of many foreigners; including the Chinese, in various parts of Iran, and the construction of mining farms to extract crypto currencies, especially bit-coin. Electricity is now offered at the lowest price in Iran, while the digital currency produced with this free electricity is traded at the highest rate in the world; This has opened the door for many international digital currency miners to benefit from cheap electricity in Iran; According to some semi-official reports, miners from China are now present in various parts of Iran and are extracting digital currency with cheap electricity.
These suspicions came to fruition when a video went around among Iranians on the net, which showed an Asian person in explaining and giving reporting on the process of building a farm and extracting bitcoins around the city of Rafsanjan in Kerman province in Iran in Chinese. It was then that several members of the Islamic Consultative Assembly acknowledged this.
In the meantime, some farms, poultry or livestock, have become places for mining digital currencies more economically due to their much lower electricity tariffs. But not only foreigners, but also many Iranians who have realized the economic benefits of this, are engaged in extracting digital currency by renting large sheds or various farms. These farms are trying to remain low key about their activities and the change in usage of their farms.
"Because the activity of virtual currency miners is not completely official, it cannot be determined that the Chinese have a larger presence than other foreigners or Iranians, but what is clear is the presence of international miners in the country is growing." said Ali Bakhshi, chairman of the board of the Iranian Electricity Industry Syndicate.
Cheap electricity in Iran, which costs less than 10 cents per kilowatt an hour, may not be cheap for Iranians who use the rial for financial transactions, but it is very cheap for those who deal in dollars, euros and even yen.
Bakhshi, chairman of the Board of Directors of the Electricity Industry Syndicate of Iran, assessed the current activities of these extractors to the detriment of the electricity industry, noting: "What is happening now is that these extractors use subsidies that the government provides to the people of Iran for producing and selling electricity"
Electricity is produced in Iran at a cost far higher than the supply rate; thus, digital currency extractors are in fact subsidized for the personal use of the people. Along with this issue, there have been problems with the distribution of Iranian power in recent years, which have always resulted in frequent blackouts in various cities. This has led to more criticism of Iran's use of electricity to extract crypto currencies by foreigners.
In order to protect some sectors, such as mosques, schools and the agriculture, the legislature has set much lower tariffs for these sectors, which has made digital currency miners more inclined to attend these sections and use free electricity for more cost-effective extraction.
Gholamreza Sahafi is the eldest son of the Sahafi family who have owned a cattle ranch in Asalem, Gilan for many years. But for some time now, Gholamreza, who studied computer science at Shahid Beheshti University in Tehran, has returned to his father's workplace and is using the place to extract etherium by using a few mining rigs and installing many graphics cards on several motherboards:
"We have not closed the farm, but we have planted mines in the space we have. It has a very good income. Even if you do not have a lot of initial capital, you can start with fewer graphics cards and earn the minimum wage in Iran without working or even more than that. It is the easiest five million tomans you can earn per month."
Gholamreza claims that he knows old farms in the vicinity of Asalam that have been leased to foreigners working with Iranian engineers, and that dairy products from these farms have now either been cut off or drastically reduced. However, it does not seem that the law can explicitly prevent this.
While the head of the president's office announced Mr. Rouhani's order to the Ministries of Information and Interior to deal with unauthorized users of electricity that extract bitcoins, the spokesman for the electricity industry also mentioned the payment of a 20 million toman reward for introducing unauthorized bitcoin farms. However, many micro-extractors can easily hide this.
Mahmoud Vaezi, the head of the presidential office, claims that the government has given "some" permission to extract digital currencies, and that it is clear where licensed digital currency miners operate.
According to a recent report by Bloomberg, every bitcoin requires the equivalent of 24 years of home consumption of electricity in Tehran. The subsidy for each kilowatt of electricity is 5,000 rials, which means that the production of a bitcoin unit has a government subsidy of about 35 million tomans. Last winter, government officials advised people to wear more clothing and reduce the temperature of their radiators to reduce electricity consumption at home; People also have to endure power outages and air pollution under the pretext of increasing power distribution.
Parviz Seyed Salehi, an activist in the Chinese blockchain sector in Iran, believes that there is a significant percentage of energy loss in the country's transmission network on a daily basis. In addition to generating income, it is possible to control this problem if local activists can establish crypto currency mining farms next to power plants. But, according to him, not only is there no support for Iranian miners, but there are also many legal obstacles:
"The tariff that is given to crypto currency mining centers is the highest tariff of its kind in the country, and at the same time, this industry has yet to spread much in Iran. For example, the compulsion to form mining farms in industrial estates can be mentioned. Even though these regions have poor infrastructure for energy transmission, and their officials have little interest in shaping the industry there."