Chinese Miners Looking to Iran as Alternative Ahead of Potential Ban When Chinese government officials talk about cryptocurrency mining, the global industry listens with attention. China has become the world’s foremost crypto mining location, with a recent study estimating the country’s mining pools to be in control of approximately 74% of Bitcoin’s total hashrate. Therefore, the recent rumblings about a Chinese crypto mining ban have all industry insiders, and more than a few interested outsiders, wondering what comes next in the event that further regulatory limitations are placed on Chinese miners. For the last year Iran has become a much touted alternative for Chinese miners, but the reality may not hold up to the promise. Iran and the Economics of Crypto Mining The calculus for crypto mining may have a number of factors, but the most important element is energy cost. There are many locations across the globe that offer the right combination of low cost access to the necessary infrastructure, but few that also offer the steady stream of cheap power that determines a miner’s marginal profitability over the long run. Iran sits on enormous reserves of oil and gas, making it one of the world’s leading energy producers and exporters. It also has internal policies that translate this massive hydrocarbon wealth into cheap energy prices for the people and companies residing within its borders. Electricity in Iran can cost as little as $0.006 per kilowatt-hour according to an anonymous Chinese mining company with operations in the country, which contrasts favorably with the price for Chinese crypto mining hotspots of $0.02 to $0.04 per kilowatt-hour. Escaping One Set of Regulatory Restrictions to Find Another Therefore, on the surface Iran with its similar infrastructure and labor costs and lower costs for energy seems like an ideal alternative to an increasingly inhospitable China. However, miners are finding that they are coming up against similar regulatory problems to those that they are attempting to escape from. While it may be easier to avoid the regulatory gaze in Iran, crypto mining equipment is still a nominally banned import. This means that miners looking to set up in Iran face a gamble when attempting to move their mining rigs across the Iranian border. Mining companies need to either be small enough that their imports slip under the radar or large enough that they can make the right connections with the right Iranian officials to see their equipment safely into the country. Miners then face similar problems in their operations within Iran. Local power companies have been known to offer miners low starting costs that rapidly increase once the infrastructure is in place. Furthermore, the general regulatory uncertainty makes them vulnerable to other forms of criminal interference, such as bribes and extortion. The Future of Iranian Crypto Mining While the threat of further Chinese crackdowns and the promise of cheap power may make Iran seem like a strong alternative destination for miners on the surface, the current Iranian regulatory regime and the unlikelihood of any improvement on this front mean that Iran will probably remain a backwater in the global crypto mining industry for the foreseeable future.