While some bitcoin miners are estimated to have shut down hundreds of thousands of machines – if not more – others are still out there looking for alternative ways to keep operating.

And it’s Iran, with its extremely low-cost electricity (that can go as low as $0.006 per kilowatt-hour) that’s luring overseas miners. But as attractive as it appears, the journey to setting up shop in Iran isn’t turning out to be a simple one.

Bitcoin mining is, in effect, a kind of energy arbitrage. Miners make their money when the cost of producing coins – currently 12.5 bitcoins per transaction block, plus any fees they’ve accrued – is lower than the operation of the mine itself, including electricity.

Nima Dehqan, a blockchain researcher at a Tehran-based crypto startup Areatak, told CoinDesk that the firm has been meeting with foreign investors that are looking to attempt just that by mining in Iran.

“We have had investors visiting our farms from Spain, Ukraine, Armenia, France,” he said.

Dehqan added that his firm has signed a deal with a Spanish investor to set up mining farms in Iran, a process that will consist of three phases.

“First is sort of a just-to-make-sure testing phase, which is already in place. Second is building new infrastructures together, which somehow has already started, too. And the third will be gathering more investors from outside of Iran,” he explained.

Dehqan said investors are attracted the cheap electricity, which, depending on the actual source of power, can usually go well below $0.01 per kilowatt-hour. And his firm can run facilities at different scales, from two-to-three-megawatts small farms, to higher amounts like 10 – 20 megawatts.

He said while the electricity cost in Iran has always been relatively low, the recent significant devaluation of the Iranian rial – partially due to the recent sanctions by the U.S. government – has made the opportunities even more appealing.

Secret shift

There’s even evidence to suggest miners in countries commonly seen as bitcoin mining powerhouses – China in particular – are looking at Iran for potential opportunities.

Compared to the numbers cited by Dehqan, electricity provided by hydropower stations in China’s southwestern region usually costs around 0.15 yuan – or about $0.02 per kilowatt-hour – in the summer when water is abundant. When winter comes, the cost could go up to $0.04 per kilowatt-hour.

It appears that some Chinese miners have already made the move. A startup based in Chengdu, China, told CoinDesk under the condition of anonymity for fear of government reprisal that it has already deployed 2,000 miners in Iran.

“Iran has vast natural gas resources and thus the electricity cost can be as low as 0.04 yuan [$0.006] per kilowatt-hour. But Iran doesn’t really have any firm making miners. Now that secondhand miners are being sold cheaply in China, it’s a rather reasonable business decision. With electricity that cheap, you can generate profits in one to two months,” the company said in a statement.

Javad Sedighi, a self-employed cryptocurrency miner in Iran, echoed that point, telling CoinDesk that local miners largely rely on the import of machines to the country.

“[That’s] because there are no companies, like Bitmain, [shipping equipment] to Iran. In the past few months, there have been intermediary companies [being] established in Iran that carry out the import of the machines,” Sedighi said, adding:

“I think this is done by people who have a lot of power and money. And it’s done secretly.”

That kind of potential – particularly for very cheap power – has even caught the attention of notable Chinese bitcoin millionaires like Chandler Hongcai Guo. On Oct. 26, Guo posted a video on his Weibo account, telling a group of audience that there’s a huge opportunity in Iran where electricity cost can go well below $0.01 kilowatt-hour.

“It’s suitable for hosting secondhand miners that are on the edge of shutting down in China and can make profits in one to two months,” he was recorded as saying, and asked interested miners to visit Iran to do their own due diligence.

No simple paths to entry

But in conversation with CoinDesk, Dehqan sought to temper the idea that miners are rushing into Iran en-masse since the methods by which foreign investors can set up mining facilities are anything but simple.

The Chinese miner that has set up 2,000 machines said one major hurdle for outsiders is to get miners inside the country to begin with, let alone establishing partnerships with local farms.

The company explained that, currently, the Islamic Revolutionary Guard Corps – a branch of the country’s military – still has significant sway on the border. Simply put, they have the power to decide which shipments come in and which ones do not.

“There’s the risk of miners being detained and confiscated at the border. While some logistic companies may have an insurance policy to cover the loss but you can only get compensated by fiat and miners will be gone,” the firm said, adding:

“It’s still very risky. Even though we also try to act as an agent to help other miners go overseas, many of them remain hesitant.”

Dehqan echoed that point and added it’s not so easy to import miners into Iran and some special shipping procedures are necessary.

Sanction complications

And it’s not just internal pressures like border security that are proving to be barriers to would-be investors. Indeed, there’s one particular figure – U.S. President Donald Trump – who has thrown some wrenches into the proverbial gears.

As it stands, current U.S. sanctions have further deterred potential investors that have ties to the world’s largest economy. Guo, who owns a mansion in California, told CoinDesk via WeChat that while he agrees the opportunity is very attractive now that the bitcoin mining difficulty and the overall network hash rate have both dropped significantly, investors like him would not dare to become involved.

“I didn’t go visit myself, considering that the U.S. has imposed the economic sanctions on Iran,” he said, alluding to recent news that the chief financial officer of Huawei was arrested in Canada for alleged involvement in sanctions fraud.

“Most of the mining giants in China, or miner makers, do not dare to host their machines in Iran. This is the general situation. As attractive as the electricity over there might be, only miners at an individual or much smaller scale are shifting to Iran. Most people are still hesitant.” Guo said.

On Aug. 6, the Trump administration announced it would re-impose sanctions on Iran starting from Aug. 7 after withdrawing from a nuclear agreement the U.S. government first entered in 2015. However, the European Union, Russia and China have been reportedly seeking to uphold the agreement to allow businesses and financial transactions to continue with Iran.

According to Sedighi, cryptocurrency mining in Iran itself is still a legal grey area, which means that it’s neither entirely legal or illegal.

“The rules of the mining industry in Iran have not been approved by Parliament. But it is in hand,” he said. “In Iran, like the rest of the industry, you do not have a license to operate. For example, you can not get a bank loan.”

To that effect, Sedighi said the local crypto community is working together to push Iranian lawmakers to pass a formal law that would protect the mining industry, thus enabling it to attract capital and grow.

“We believe that political disagreements between governments should not harm the people,” he said, concluding:

“There have been very much talks about sanctions, as well as methods that should be used by the Iranian crypto society to avoid harming sanctions.”

Tehran image via Kanisorn Pringthongfoo/Shutterstock