Crypto Miners Unimpressed by Gov’t Incentives

EghtesadOnline: The Energy Ministry's recently-announced discounts on power rates for authorized cryptocurrency miners seems to be not enough for making the business financially feasible.

News ID: ۷۴۹۰۳۹

26 November 2019

In fact, some miners say even the new tariffs cannot improve the industry's competitiveness.

Benyamin Abbasi, technical manager at an authorized crypto mining company, says, "The Energy Ministry is somehow right as it tries to find a solution for its problems. But countries like Georgia and Kazakhstan are now offering better and more attractive incentives to crypto miners."

Speaking to IRNA, he noted that negotiations are underway with the ministry to further reduce power rates, Financial Tribune reported.

Back in November and in an attempt to address concerns over high electricity prices for legal crypto mining operations, Iran's Ministry of Energy revised the tariffs for authorized miners based on seasonal power consumption patterns.

As per the measure, miners would be charged 4,800 rials for one kilowatt-hour -- equal to half the electricity export rate in autumn, winter and spring. However, billings were to be made based on 19,300 rials/kw, two times higher than the price for electricity export, in the peak summer season (June to September).

In Abbasi's point of view, "by setting tariffs at 2,000 to 2,500 rials/kw the ministry would be able to address its own concerns and at the same time keep the mining business feasible."

Renewables Infeasible

In spring, the Energy Ministry along with the Law Enforcement Forces, shut down a large number of mining farms with the aim of preventing possible blackouts in summer.

The measure prompted the government to significantly raise power tariffs for crypto mining to 7 cents/kilowatt-hour, to address concerns over possible power outages in summer and indirect subsidies going into the pockets of crypto miners.

New rates were approved by the government as part of a plan to regulate the crypto mining business.

The government announced that prospective miners have another option regarding electricity use. They can set up their own mini-grids or renewable power plants. Those who want to build mini power plants should decide the location and subscribe to the national gas grid. The gas feedstock price for grids will be equal to 70% of gas export prices.

In yet another incentive, Iran's Renewable Energy and Energy Efficiency Organization (SATBA) announced last week that it would purchase the excess electricity output of authorized miners who have their own renewable energy farms.

As per the announcement, authorized crypto miners, who have their own renewable energy farms, can feed the excess energy into the national grid and receive equal amount of electricity when they need it.

But the incentives are seen differently by the miners. "Setting up a renewable power plant is costly…it is not economically viable for us…using our own power plants is also not economically viable," Abbasi says.

"The Energy Ministry is right…we understand this…but more discounts are needed to keep the business doable inside the country, otherwise miners will start leaving.”