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Sputnik interview with Hamidreza Shaabani on the future of blockchain and crypto mining in Iran

Soraya Nildarar
Written by Soraya Nildarar

Cryptocurrencies are important new phenomena of the financial technology area, which is receiving attention from countries and financial markets in the payment field given its facilitating functions in this regard. A limited unsupervised number of transactions are also being done through cryptocurrencies in Iran, besides the importance and extensive employment of digital currencies in the world. Moreover, there are speculations that cryptocurrencies can help with economic sanctions. During the recent years, the government has decided to make deliberate determinations respecting this field, consequently. The supervisory bodies have also conducted researches, and Iran is currently within the process of implementing initial and final policies to determine the engagement of participants in the field of digital currencies. Sputnik news agency interviewed Hamidreza Shaabani, the founder of Arzdigital on the future of crypto mining and blockchain technology in Iran, Earlier in September. The following lines contain the full transcript of the Sputnik interview.

Click to view the Transcript in Farsi

What is the current stage of the blockchain industry in Iran?

If viewed from a perspective related to the blockchain technology, we could say that the phenomenon of cryptocurrency is currently in a research stage and has not entered an operational phase; Meaning that blockchain based systems or software have not come into the realm yet. However, it should be considered that this issue is globally applicable and most of the governments and well-known companies are also in the research and experimental phase. Nevertheless, foreign companies are a few steps ahead in blockchain development and are close to officially starting their blockchain-based products.

China is speedily heading towards a blockchain-related environment and is going to introduce a number of significant projects despite the country’s raging war on cryptocurrency. It is also assumed that the blockchain-based election systems which hinder fraud could be operational by next year.

Considering the general level of digital coins, with a look at US sanctions, the devaluation of the national currency, the stagnation of industries and … in our country, it could be said that the tendency to adopt cryptocurrencies is increasing.

According to Iran’s Internet usage reports, the 50 million internet user community of the country has reached a place among the ten leading nations searching and viewing cryptocurrency related subjects in the world. Therefore it could be concluded that cryptocurrency is one of the hot search trends in Iran.

Allow me to mention that Arzdigital is receiving 100k Page Views from aspiring internet users in Iran, which indicates a growing interest towards this field.

Does Iran have the capacity to host crypto mining servers with the present pressure from US sanctions?

Since this industry is not centralized, the possibility of intervention from monitoring and probing agencies is negligible and theoretically not feasible or easily done in countries like the United States.

The only constraint ahead may be importing the crypto mining equipment, which is generally shipped from China. And of course, the financial transactions settled through Yuan, diminish the chance of America’s restricting activities into very low levels.

It is reasonable to mention importing Asics equipment from China, importing graphics cards (GPUs) from Dubai, China, turkey, and Erbil-Iraq, plus the production of domestic mining hardware that requires a high level of scientific knowledge and capability, regarding the technological potential ahead of Iran.

Given the network difficulty and bitcoin’s current price, the estimated annual profit for miners is over $7 billion, without taking into account the initial expenses and electricity costs that have been 3 to 4 times the current price over the past few months due to higher charges.

Hence, crypto mining ensures a lucrative opportunity for the country to earn loads of a currency over which the United States can hardly exercise control.

How does Iran see itself in the crypto mining industry?

Low cost of energy and high price of Bitcoin are the factors that make crypto mining a profitable industry in our endeared country. Bitcoin can be mined at a price below $ 3,000 in Iran, compared to countries with higher electricity costs, where mining cryptocurrency is practically not efficient. Also, the climate in many parts of Iran is unique in terms of crypto mining.

As I said beforehand, the mining equipment will be wholly imported since we have not yet been able to produce crypto mining machines and chips. Nevertheless, with the excellent scientific grounds of Iranian specialists, it is anticipated to benefit from the immense scope ahead of this field.

The point to consider is whether it is possible to compete with the surge of competition and the introduction of new proof of stake methods over the next 5 to 10 years or not. But, it is evident that mining cryptocurrencies such as Bitcoin is still profitable.

Does the government give services or privileges to startups that want to operate in this industry?

This year, the government allocated foreign currency to shipping mobile phones at a preferential exchange rate to handle the rise in the price of cell phones. But the intention did not eventuate, and cell phones became a rare commodity as the currency price surged and the existing inventory was traded at the price of the dollar in the free market. In practice, economic rent was created for certain people. If the same situation were to happen in the crypto mining space, it is uncertain whether the startups would ultimately benefit or not. However it would merely provide a market for a certain number of people to make very profitable gains – meaning that some traders would import mining equipment into the country by foreign currency at the government’s exchange rate and earn 300 percent of interest in less than a month from selling them at the price of the free market. We hope not to witness these incidents in reality.

How will the future of this industry be in Iran? Will the industry be welcomed?

Reportedly, digital currency is currently one of the most popular spaces for entering or attracting capital in Iran, the reason for which was previously mentioned: Low cost of energy and high value of Bitcoin.

The future of this industry relies on several issues: First, the global situation of mining and the hike in digital currencies’ prices. Second, the rapid development of alternate energy efficient methods which certainly have the ability to sideline mining. And third, the supply of energy and equipment that will create rivalry and dispossess Iran of the ability to compete.

Do the rivals leave Iran a chance to compete?

We should see how motivated other countries are for entering this area. A large percentage of competition will ultimately touch the cost of energy and equipment availability.

Ethereum mining rig in Iran – the cost of energy for mining 12.5 Ether is about $ 150 (Industrial electricity)

There are currently several Chinese companies that are launching mining farms by importing equipment into Iran, and their motivation is low energy costs and the industry being legalized in the country.

Will this industry be profitable in Iran?

Presently, yes. But, profitability will depend on several factors including initial capital, equipment selection, the coin, and the electricity.

I have a few suggestions for those who are willing to enter the market: investigate, avoid emotional decisions and actions based on the recommendations you hear from acquaintances; because this space becomes more specialized and competitive as the market moves forward, and a few small mistakes may lead to losing all of your money.

What are the limitations for this industry in Iran?

This year, as the heating system began and the cooling systems were put to work, we witnessed frequent power outages across the country.

I must emphasize that entering the industry requires increasing the power generation. Crypto mining, compared to other fields, owns the advantage of sustainability in electricity usage. There is a peak for energy in almost all areas; meaning that the power station needs to synchronize its production capability with the energy consumption peak. However, it is plausible to establish the expected capacity in crypto mining, due to its continuous use of energy 24 hours a day. This heads to a more substantial and effective procedure for Tavanir -Iran’s Power Generation and Transmission Company- and the power plants.

What is the vision statement for this industry? Is it suitable for long-term investment?

As I said earlier, several basic components influence the future of mining:

  • Substitute mining algorithms development speed.
  • Networks difficulty growth rate.
  • Cryptocurrency prices and specifically Bitcoin price, which holds a direct impact on market behavior and makes crypto mining profitable.

A far technical review does not fit the scope of this discussion, but pointing out a few subjects can provide us with a futuristic look at this industry.

For instance, Bitcoin mining giant Bitmain has closed a funding round that has valued the firm at approximately $12 billion and Canaan mining hardware manufacturer has brought in $1.1 billion in net profit. This indicates that professionals and active crypto users are interested in this industry; an element which makes it difficult for the industry to become declined or overwhelmed. Therefore, we can be hopeful for its future.

Is crypto mining the most profitable approach in this market?

People are usually interested in results and achievements that are visible and tangible. Especially, the cost-effectiveness matter in this industry, which does not merely end in cryptocurrency mining.

Software and systematic development in blockchain space will potentially be more lucrative than crypto mining in Iran’s future.

It is possible to highlight a more perspicuous example for the future of this technology using the connection between Bitcoin and blockchain, comparable to the link joining Edison’s light bulbs and electricity.

We are still about the beginning of this sophisticated labyrinth and have a ways to go, as the Chinese government has long claimed that ‘the effects of the blockchain will be ten times more than the Internet.’

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Soraya Nildarar

Soraya Nildarar

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