A new crypto mining firm has been issued a license to operate in Iran. According to a local media source, iMiner, which currently has mining firms in the US, Canada, and Russia, will operate around 6000 mining rigs. Iran officially recognized crypto mining in July 2019 and this was issued under that new law. It is estimated that iMiner spent around $7.3 million to set up the mining firm. Thus far, this is the largest crypto mining firm known to operate in Iran.
An Attempt to Ease US Sanctions
For years, US sanctions have dealt a huge blow to Iran’s economy, including the financial sectors. The country finds it difficult to operate within the global economy due to the sanctions. As a result, some have speculated the huge interest Iran has shown in crypto is due to its ability to allow them to evade the sanctions.
According to a report by Congressional Research Service, it was stated that sanctions included the lock up of $2.1 billion in Iranian Bank bonds. These assets have been frozen in Citibank, NY accounts since 2008. In addition, it’s believed that other assets surpassing $1.6 billion are being frozen for various financial reasons.
The license, which was issued by the Iranian Ministry of Industry, Trade, and Mine, will also allow the company to engage in the buying and selling of crypto as well as acting as a custody provider. iMiner considers itself highly experienced in the crypto mining sector. With operations spanning five nations, it controls about 0.08% of the Bitcoin mining power.
With its new mining firm in Iran, the company will be able to mine around 375 BTC in 7 months, which is worth around $3.3 million at current prices with a block reward of 12.5 BTC per mined block. However, the BTC mining reward is set to drop by half in a few days during an event called the halving.
Crypto Mining Electricity
Since Iran officially recognized the crypto sector, numerous crypto firms have been flocking to the country. Most of these companies come from China, while others come from Ukraine. The main attraction to crypto mining in the country is the low cost of power. In Iran, the cost of power is $0.006 per kWh. However, for crypto miners, the rate was increased to 5 cents per kWh, which is still extremely low compared to most other nations. The country’s huge electricity power plants powered by its huge energy reserves make it possible to offer such low rates. Besides selling power domestically, the country is also a net exporter of electricity, which helps to further the cost of power further.
Crypto mining can be life or death when it comes to electricity costs. This is why operations are being funneled to geographic regions that are most favorable. The impact on overall return is quite jaw dropping. According to a report by CNA , mining an individual Bitcoin in South Korea was costing $26,170 in 2019. This environment is highly unsustainable for miners, especially since Bitcoins price was never close to this break even point in 2019. At the same time, the report outlined that in 2019, mining a single Bitcoin in Venezuela would cost $531.
How iMiner Operates
iMiner operates the mining firms. Besides that, you can rent mining power from the company and the company will pay you any income they make from your rented mining power. Besides that, they engage in the selling of mining rigs.
Until last year, Iran was very suspicious of the crypto mining industry. The government was wary of the use of crypto to bypass the central government to conduct monetary transactions. However, after lengthy deliberations, they agreed to give official recognition to the crypto industry. No doubt, increased US sanctions made the use of crypto seem more attractive. Today, around 1000 companies in Iran have received licenses to operate as crypto mining firms.
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