Crypto winter is painful for cryptocurrency mining investors. With the rapid downfall of Bitcoin and increasing electricity bills, Chinese mining investors are looking for solutions to sustain their businesses. Is Iranese cheap electricity going to be the one?
Bitcoin’s Continuous Downfall
The recurrent downward fall in Bitcoin price is no longer news. Since the beginning of the year, Bitcoin has suffered a massive drop in price with the currency market continuous decline and gradual shrinking of mining earnings.
The final crash was experienced towards the end of November when the price of Bitcoin nosedived from $6,500 to $3,500 within ten days falling below the shutdown price. These challenges have seen many miners sell off their mining gadgets for peanuts and entirely abandoning their much-invested project. As predicted by the founder of Chinese Mining Sea Association (矿海会), an additional 6% – 7% of miners are set to fold up in the crypto winter.
Impacts of Electricity on Bitcoin Mining and Mining Equipment
Electricity is now the most significant cost of cryptocurrency mining. Bitcoin system has a severe problem in each round. The problem solver can get the new Bitcoin and billing fee in this round. The more calculating power he has, the more likely he is to solve the problem.
With the increasing difficulty of calculation, people have developed an ASIC miner, especially for the specific algorithm. It possesses strong computing power, but similarly, consumes a lot of electricity.
Since the turn of the year, the domestic regulations of mines have been tightened with the cost of power on the rise. Also, the average price of mines extends from something over 6 – 8 gross leading to the higher cost of production and decreased revenue and gain.
Although, the other contributing factors to reduced lucrativeness of Bitcoin mining include the price of Bitcoin miners, and site fee charges. However, electricity has been reported to be the leading factor on the return cycle of the miner.
Nowadays, the S9, once recognized as the most cost-effective machine in the industry, is on the verge of shutdown. Industry insiders have estimated that more than half of the mining machines in operation on the market are ants S9.
The Search for Affordable Electricity
“I have already found a power station with 4 cents electricity in the Middle East. It is suitable for all kinds of second-hand mining machines that will be shut down. Investment can be returned in one month. Whoever wants to join, you are welcome”.
On October 22nd, Chandler Guo (Guo Hongcai 郭宏才) popularly referred to as “BitAngel” in the cryptocurrency word sent out a call to discover the cheapest electricity source globally with 100 Bitcoin at stake. After four days, Guo Hongcai released a micro-blog video stating that he had received over 400 responses. However, the most appealing to him is from the Middle East country – Iran with electricity as low as 4 cents per hour.
Iran, the New Phase of Bitcoin Mining
Iran, a country associated with political and religious instability currently face sanctions from the US. They can offer electricity even at 3 cents in certain situations.
When Chandler Guo disclosed his finding to the public, many miners have gathered from all across China to inspect the proposed new site for mining – Iran.
The low-cost electricity that Iran offers implies that many miners will be back into the business, and hopefully, they can revive mining and the general price of Bitcoin in the capital.
BitAngel predicted that many miners would be interested in the Iran electricity discovery. Surprisingly, the number of people that have shown interest in the project rose to 500 within a couple of hours after the announcement.
Several large mine owners most especially from China have visited Iran for inspection over the past weeks. Also, according to several reports online, many are planning to set up their mine in the Middle East country.
For instance, mining investor, Zhang Wen has already established a mine in Iran, and they are set to begin operation as early as next month.