The Iranian government has steadily been putting pressure on local crypto-miners in the past three months thanks to new legislation in the works that would regulate cryptocurrency mining via licensing.
Without any official legislation put out, crypto-miners around the country with a sense of perpetual fear and paranoia, running the risk of losing all their equipment, being overloaded with incredibly hefty fines, or outright arrested and jailed for the practice.
It’s been estimated that over 80,000 mining machines have been confiscated within the span of the last four months, with one bitcoiner, in particular, losing thousands of machines, and causing the loss of income for 30 households that relied on these mining operations.
The Iranian government isn’t pulling any punches with their fining process. Several bitcoiner’s simply gave up the deeds to their houses, because they couldn’t pay the exorbitant fines, usually more than their annual salaries. The fines can range from $2 000 to $5 000, per machine, several times more than its retail value.
That is usually added to the already steep electricity fines given out. Such fines are four times the annual cost a business has. An example would be if a group mined bitcoins, paying $5 000 for electricity in the span of a year, they would be fined a shocking $20,000 for using subsidized electricity.
The legality of crypto-mining within Iran is compounded by, for lack of better words, the fact that the easiest way to gain mining-capable equipment within Iran is through the black market.
Everything from televisions to air conditioning units are bought like this, with official retail outlets in Iran usually selling items of lower quality and higher price compared to foreign grey markets.
It’s a safe deduction to say if the Iranian government wants to crack down on these smuggled pieces of equipment, they would have to hold almost all of Iran in contempt and fine them accordingly.
The Start of It All
The reason Iran, in particular, is making waves is because of the staggering cheap energy rates within Iran. In some places, the electricity rate is as low as $0.0006, which, understandably, creates an attractive market for an industry that mandates extreme power demand. Crypto-mining is ultimately a game of balancing out the costs compared to the value of the cryptocurrency you get, and one of the major factors of that is the energy consumption costs.
Even outside of Iran, many investors took notice of it, but the same difficulty of smuggling equipment for local miners is the same problem for international investors. Regardless, this new chapter in Iran’s history will undoubtedly have a tremendous impact on the country. If done correctly (and quickly), the new legislation could boost Iran’s economy by an incredible degree.
Or it could ruin an opportunity due to government interests. All we can do is wait and see
Author: Ali Raza