"War cannot be fought", Iranian miners escaped the war but could not escape "informing"

Author: 0x66

Source: BlockBeats

No more war. On the morning of January 8, local time, in a delayed national speech, US President Trump responded to the US-Iran relationship by saying that he was "ready to embrace peace" and "will no longer make a direct military response."

Although it was determined that this war would not break out, after receiving Trump's clear attitude, Liu Wu (pseudonym), a Bitcoin miner who was worried, breathed a sigh of relief: the alarm was lifted and the mine was safe. However, with the news that "Iran's military admitted that it shot down Flight 752 due to human error, killing all 176 people on board" that shocked the world in the past two days, will the situation that has just stabilized be disturbed again?

Liu Wu, who had just returned to Shenzhen from Iran, was still frightened when he heard the news that the plane was shot down. Since entering the mining industry in June 2018, he has been responsible for the planning and investment promotion of the Iranian mine. After more than a year of intensive preparation, in July last year, the factory filled with mining machines shipped from China just started to roar.

Choosing to open a mining farm in Iran is a bold decision. This Middle Eastern country located east of the Persian Gulf is considered a mining paradise by crypto practitioners. The electricity fee here is as low as 3 or 4 cents, which is much lower than that in China. Because of this, many miners from China have come here from afar to build factories.

However, this place is definitely not "gold everywhere" as imagined. Many miners from the front line told us that the unstable regulatory authorities and the Iranians who like to snitch are the main reasons for blocking Chinese miners from going to the country to pan for gold, while the increasingly mature brokers and rising commissions are narrowing the gap in mining income between the two countries.

This time, the mine owners may not withdraw urgently, but the miners who are waiting and watching should really think carefully.

The miners all said that this battle could not be fought.

Iran is rich in mineral resources and oil is distributed everywhere. As everyone imagines, this country has unimaginable wealth because of black gold. The rich natural resources, coupled with the relaxed relations between China and Iran, also made Chinese entrepreneurs 5,000 kilometers away smell the opportunity to make money and came here early.

However, this country in the Middle East, a military stronghold, is not stable. This time, the United States suddenly killed General Soleimani, a general of the Iranian Revolutionary Guard, in an airstrike, and the two countries became tense instantly. Subsequently, the angry Iran launched more than a dozen short-range ballistic missiles targeting the United States, hitting the US military base in Iraq; coupled with the news of "civilian aircraft being shot down" continued to ferment, and war was imminent.

All of this will not affect the crypto mining farms for the time being.

In addition, some miners even believe that this is a "conspiracy to compete for resources" because this incident is enough to affect global oil prices and even the exchange rates of related countries. "When the news came out that the United States and Iran were going to go to war, many people suspended stock trading and even liquidated their positions. On the other hand, stocks of military-industrial enterprises rose against the trend. Later, news came out that the United States wanted peace." The ultimate beneficiaries will only be the arms dealers. They believe that without more bad news, this war will not start.

Liu Wu, who is currently planning a 160,000-kilowatt mine (with an investment of tens of millions of yuan), holds the same view. Even in the most tense situation, they did not make a plan to "withdraw" from Iran. At this time, it was only six months since July last year when the mine was put on track.

Liu Wu's rare metal company has been operating in Iran for five or six years. He is a senior executive of the company who was sent to Iran. He has accumulated a lot of government and personal connections there. It was only by chance that he got involved in mining. "I learned about mining because someone approached us in the second half of 2018 and wanted to find a team to help build a mine."

Liu Wu later learned that the price of Bitcoin at that time had once broken through the price of many mining machines, and many miners had no choice but to "sell by weight". At that time, many of the people who contacted them were mine owners who had just purchased a large number of second-hand mining machines from Sichuan and other places. Taking this opportunity, he learned about Bitcoin and mining. After realizing that this was a highly profitable business, he quickly reached a partnership with several friends and began to look for people, money, and connections to prepare for the construction of a mining farm.

In most cases, the price of electricity is an important factor in determining whether a mine is profitable and whether it can continue to survive.

Iran's electricity costs as low as a few cents, so entrepreneurs who come here to mine can temporarily ignore this factor. But in addition to electricity, if you want to build a mine in Iran, you must also find a suitable site and partner, or coordinate local relations.

With the background of his company, Liu Wu's mine did not encounter any obstacles in compliance. "We are the only company in Iran that has obtained a mining license," he emphasized, "This license is enough for us to conduct mining business in compliance with regulations in Iran." According to Liu Wu, when choosing companies to issue licenses, the government generally only chooses those companies that are strong, large in scale, and contribute to the local economy.

Regular miners don’t need to worry about compliance, but this rule directly blocks the way out for small mines.

"It's not easy for mining machines to pass through customs without a license," Liu Wu said. In the past, illegal mining machines were seized by overseas personnel. Liu Wu said that in this country, which is only nine or ten provinces in China, the government is not "interested" in cryptocurrency mining, and the minimum limit for mining farms to exist is not to affect local residents.

"Many mines that cooperated with small power plants and had shallow foundations did not dare to dig after being fined."

Another miner, Lao L, was more direct, saying that "building connections" is an important factor in determining the profits of mining in Iran. "It depends on how ruthless the locals are. Generally, they will take 50% of the profits." He told BlockBeats that most of those who earn a lot of commissions are Chinese.

These brokers who travel between China and Iran describe the low electricity costs and grand vision of foreign countries to domestic investors, and then go to power plants of all sizes in Iran, chatting and laughing with local people, trying to promote cooperation. Excluding commissions, according to electricity prices, the current cost of mining in Iran has basically been converted to 3.5-3.7 cents. "If you are not well prepared, you can't do it at all."

However, even after completing all the above processes, mine owners may still face another unpredictable challenge: informing.

“Iranians love to snitch”

Iran is not a country that does not allow crypto mining.

As early as July 14 last year, an official from the Iranian Chamber of Industry, Mining and Agriculture said that a gold-backed cryptocurrency would soon be launched, which would be mined with the permission of the central bank. A week later, the Iranian Chamber of Industry, Mining and Agriculture announced that the Iranian government's economic committee approved the establishment of a cryptocurrency mining mechanism. In addition, regarding the import of mining machines, the Iranian Customs Administration has also determined the tax rate standards for mining equipment. Mining machines are regarded as a computing device and enjoy the same tax rate standards as computers.

This means that mining in Iran has been officially permitted, but along with compliance comes increased electricity prices.

According to miners in Iran, under the new standard, the cost of mining has been raised to the equivalent of 0.05-0.07 USD per kWh. With other fees and costs, the cost is comparable to that in China. In this context, many small mines with small scale and poor connections are "forced" to go "underground" to find cheap electricity. But such days are not easy.

"After the new regulations were introduced, local governments issued notices, and illegal mining farms were gradually banned." Liu Wu, who has worked in Iran for many years, told BlockBeats that Iranians also have a characteristic of being fond of reporting on illegal activities of outsiders. The government uses this to give full play to the power of the masses and encourages people to report illegal mining activities. "It is said that the whistleblower is given a reward equivalent to 20% of the value of the mine."

That is to say, even if these small mine owners escaped the war, it would be difficult to escape "informing". "The low electricity price originally benefits the residents of the country. Since cryptocurrency mining itself does not help the country, the government will definitely not be happy to be fleeced." Liu Wu said that as a result, many small power plants are afraid to cooperate with small mines, and many Chinese miners can no longer work.

Previously, there were media reports that in Iran, due to the huge noise of mining machines, they were reported by local people and eventually confiscated by local authorities.

Is overseas mining a good business?

In fact, whether they go to Iran and other Middle Eastern countries in person, or go to Iceland and Russia, or go south to South Asian countries such as Malaysia and Vietnam, countless miners are willing to leave their familiar homeland and go to a country where they have no relatives to find the lowest cost of mining, all driven by profit.

For crypto mine owners, both abroad and domestically, they will face similar problems before deciding whether to mine, such as electricity bills, mining machine costs, as well as factory construction, equipment, network, manpower and operation and maintenance expenses. Since the floating space of the latter categories is limited, what currently drives miners to go around the world to seek opportunities is more due to electricity prices.

Therefore, according to the calculation of electricity costs, Venezuela only needs $531 to mine one Bitcoin, making it the country with the lowest mining cost in the world; Iran's electricity bill is only 4 cents, Malaysia has free electricity and other gimmicks have attracted domestic mining owners to rush to other countries to find the "best mining site".

In fact, behind these low-priced electricity, there are many hidden pitfalls that are not easily known.

For example, due to objective reasons such as the huge size of mining and power equipment and the small size of Iranian ships, it takes at least nearly a year for the mining machines to pass through customs and be displayed, plus the handling of local relations. In addition, if it is not a compliant mine, it also faces unpredictable denunciations from local residents. Electricity costs in Venezuela are indeed low, but frequent power outages and kidnapping and extortion of foreign miners are commonplace.

Iceland, once called an ideal country for mining by miners, has an excellent low-temperature heat dissipation environment, but it is also facing the dilemma of insufficient local electricity and the destruction of the local natural environment by building more dams and power stations. For these miners who migrate around the world, integrating into the local environment is already a very high barrier.

However, in the crypto ecosystem, experienced miners have always been the group of people who are most sensitive to risks and profits. It is precisely because of the miners' unremitting pursuit of profits that crypto mining has developed to this day and become one of the business activities with global influence.