Feasibility study for establishing a bitcoin and Ethereum mining farm in Iran
- Iman Habibi
- Cryptocurrencies
To prepare a feasibility study or Business Plan for the construction of a bitcoin and Ethereum mining farm, to submit to the bank or obtain a license, read this article and then contact us.
In this article, we will examine cryptocurrencies and technical tips on bitcoin mining with cheap electricity in Iran in detail and in very simple and practical language.
Definition of Bitcoin in simple language! And is bitcoin mining legal in Iran ?!
Bitcoin was the first cryptocurrency and the beginning of a revolution in the world of money, created by an unknown identity named Satoshi Nakamoto in late 2008.
The creator of Bitcoin hid from the world for 13 years and finally introduced himself in 2021. Yes, the creator of Bitcoin is a person named Craig Steven Wright, an Australian IT expert.
You can buy goods with bitcoin, you can exchange it with world currencies such as dollars and euros, or you can even use it as an investment tool due to the change in its value over time.
Being able to connect your miner device to electricity and the Internet and print money can be tempting for anyone, so before we go into the details of bitcoin and the reasons for its creation, as well as the technical tips around it, let's look at the economic dimensions and We will pay for its production conditions in Iran.
First of all, we must say that the bottleneck of the Bitcoin or Ethereum mining business, and all proof of work cryptocurrencies like Dogecoin and Litecoin and ... , is its power supply.
Although the extraction of cryptocurrencies was recognized as an industry by the Ministry of Industry in 2018, the use of municipal or industrial electricity to extract bitcoins or Ethereums or other cryptocurrencies is illegal.
So the question is what should be done to legally supply the electricity needed to extract Bitcoin or Ethereum ?!
There are only two options for this:
The first is the construction of a solar mining power plant. Solar mining power plant is a solar power plant whose electricity is used to mine cryptocurrencies.
In fact, solar mining power plant is a combination of two businesses ("solar power plant") and "digital currency mining farm", but of course in this article we do not intend to deal with solar mining power plant and only as a method for We introduced the power supply of a cryptocurrency mining farm.
But the second option we have to supply electricity to a cryptocurrency mining farm is to buy an electricity branch from the national grid but with an export tariff. Electricity tariffs for applicants for cryptocurrency mining will be calculated and applied at the average price of Rials for exported electricity at the exchange rate of the Nima system, which is determined and announced by the Ministry of Energy.
In 2019, it was announced that the electricity tariff of applicants for cryptocurrency mining in 8 non-hot months of the year is equal to half the average export electricity rate, which was equal to 480 Tomans in that year, the same rate in 4 hot months of the year is twice the average export electricity rate Is.
It is also forbidden to use these farms to mine cryptocurrencies such as bitcoin mining farms or Ethereum from the national electricity during 300 hours of the year, which is the peak time of electricity consumption and is determined and announced by the Ministry of Energy.
Here are some other rules for extracting digital currencies:
If the applicants of cryptocurrency mining produce a complex and high capacity, they will be given up to 20% discount on transfer levels.
It is not possible to use the power of existing power plants to mine currency codes. Applicants can build a new power plant to supply their electricity to extract bitcoin or Ethereum or other cryptocurrencies, in which case the gas feed rate of these power plants will be equal to 70% of the export gas rate.
Currency cryptocurrencies can supply their electricity from renewable power plants, and if the power generation of these power plants does not continue, the miners can use the electricity of the network as a backup and of course with the approved tariff.
The steps for mining Bitcoin or Ethereum or any other cryptocurrency are the same and are as follows
1) Preparation of Bitcoin or Ethereum miner device:
One of the most famous companies that launched bitcoin mining machines called ANTMINER was BITMAIN company, which is still found in abundance in global markets such as Amazon and eBay.
The following points should be considered when preparing a miner device:
Device hash rate or hash rate:
The hash is actually the unit of information processing power by this device, the more the better.
Optimal power consumption:
You have to keep in mind that the fuel of these devices is electricity, and the lower the power consumption of a minor device than the amount of bitcoin production per unit time, the more economical that device is.
Miner device price:
This factor should be taken into account in writing the feasibility study for the construction of a bitcoin mining farm, and finally, a bitcoin mining capacity should be reached that is economically justified.
2) Build a virtual wallet for Bitcoin or Ethereum:
You can create this virtual wallet directly or through those who sell bitcoins. But be careful because Bitcoin is a decentralized currency and no particular person or entity is responsible for controlling or monitoring it.
If you lose your wallet password, no one can return it to you and thus you have all the money available. You will lose your account there. This is perhaps one of the few weaknesses of e-money such as bitcoin.
3) Connect the wallet to the bitcoin mining pools and start mining:
In the rest of this article, we will discuss bitcoin mining pools and other cryptocurrencies, as well as the phenomenon of mining or mining.
If you need a feasibility study or Business Plan for the construction of a bitcoin or Ethereum mining farm or any other currency code in a completely dedicated and up-to-date manner and by reporting Comfar software, to submit to the bank or obtain a mining farm construction permit, contact us.
What are the types of investment risks in bitcoin and Ethereum mining?
Investing in bitcoin mining and any other extractable currency code such as Ethereum and Light Coin, like other investments, has risks that the investor must be aware of these risks and make this investment consciously.
Below we have divided and explained these risks into several categories, so stay tuned:
1- Production risks:
The first category of risks in this investment are the risks related to the process of currency cryptography. To mine bitcoins, you need a good place to mine, where you put the miners, this is your cryptocurrency mining farm, which acts as a production hall in other factories.
Your machines are miner devices and their fans and accessories. These miners and fans must be constantly inspected and supervised by expert and compassionate experts, because if even one of the fans fails and the farm managers do not notice it, it will cause the temperature to rise and possibly burn a number of miners' devices. Worse conditions sometimes create the possibility of a fire in the mining farm, which can cause irreparable damage to the investor.
Therefore, the mentality that you electrify the miners and the rest of the work is done automatically is a misconception and such risks should be considered and measures should be taken in advance to prevent these dangers from occurring.
2- Risks caused by cryptocurrency price changes:
All cryptocurrencies, like bitcoin, have a global price, which is set in a competitive market as a result of a supply-demand battle and is constantly changing.
Therefore, the product of currency code extraction farms does not have a fixed price and it may sometimes fall to such an extent that the cost of producing currency code exceeds its selling price and your investment loses its economic justification.
To deal with this risk, you must first use up-to-date technologies to extract bitcoins that can extract the most bitcoins with less power consumption.
This will reduce the cost of your production, and if the global price of Bitcoin fluctuates sharply, you will still have a good profit margin and the investment will not lose its economic justification.
Second, a bitcoin mining farm must employ a technical analysis expert who is proficient in currency codes and technical analysis of their price charts.
This person should be able to announce the correct times of selling the extracted bitcoin or not selling it to the owners of that mining farm, according to their knowledge of bitcoin as well as the technical analysis of its price chart.
Because when you produce a product whose price is fluctuating, you should not offer your product to the market as soon as it is produced, and you should keep it (hold) in some sections when the price is at the technical floor, and when the price is in It is a roof, put it on the market, and to identify these technical floors and ceilings, you will definitely need a person or a technical analysis team.
3- Risks caused by currency price changes:
The price of all cryptocurrencies, such as Bitcoin, is based on the dollar, and if you live in a country such as Iran, Turkey, Syria or other countries where the exchange rate fluctuates a lot, this is sometimes the case when the dollar price Decreasing these countries may be to your detriment because your product is dollars.
In that case, you must benefit from the expertise of your technical team to be able to offer your bitcoin to the market at the best price.
4- Risks due to technological changes:
Keep in mind that the extraction capacity of mining devices decreases over time, because with technological advances in this field, more powerful devices are constantly coming to market, and given that the reward system of mining pools is such that the maximum reward to It gives the highest processing power, so with the advent of newer devices, the extraction power of your current miner devices decreases. (About the nature of mining devices and extraction pools and how to reward pools is explained in detail in the continuation of the article)
For example, if you have provided 100 miners for your farm and these 100 machines can produce 10 bitcoins for you this year, next year, the same machines, with the same amount of work, will most likely extract less bitcoins for you, for example. 8 ones .
Therefore, in calculating your expected return on investment and profit, you should give more weight to the early years of your production and gradually depreciate these existing devices and after a few years, replace them with new devices.
5- Unpredictable risks:
As we all know, the cryptocurrency phenomenon is an emerging phenomenon and no one can accurately and accurately predict their future. It is true that the need to create a decentralized monetary system in the world is quite palpable, and this is the code of currencies
They can bring a decentralized monetary system to human beings, but many countries have not yet recognized these currencies, and on the other hand, their development and pervasiveness can have environmental damage to human societies.
Therefore, what games and stories the future life of these currencies is subject to is not predictable, and a person who wants to invest in the cryptocurrency mining industry must also keep these risks in mind.
What is cryptocurrency and Fiat currency ?!
As we said, Bitcoin is a cryptocurrency and like other cryptocurrencies, it has absolutely no physical existence, and you can only buy it from the Chinese blockchain network and have it as a number in your virtual wallet. You can also trade it with other crypto and fiat currencies through cryptocurrency exchanges.
One of the most popular sites for buying cryptocurrency is the website (binance) through which you can buy and sell a variety of currency codes such as Bitcoin and Ethereum.
But to better understand the concept of cryptocurrency, it is better to first review the history of money:
In the distant past, humans traded goods or commodities for their own needs, but because of the difficulty of doing so, as well as because they did not know that they had to exchange each commodity for several units of other commodities, to make an intermediate commodity. They turned it into money.
In the beginning, humans used substances that were in nature, such as salt or cotton, as money, but with the passage of time and the discovery of sources rich in that substance, it could no longer be used as money, and thus the phenomenon of permanent money. It underwent changes and evolutions until humans began to use gold and silver as money, and gold and silver coins played the role of money for about a thousand years in various empires around the world.
But these coins were also difficult to transport, so there were centers that gave receipts in exchange for receiving these coins, and you could deliver these receipts to another branch of the same center in another city and receive the same amount of coins. After a while, people gradually traded the receipts themselves, and the coins remained in those centers as support for those receipts.
These receipts gradually became paper money, which we know today as banknotes or currencies. In fact, the value of each country's currency depends on the amount of support for that money, this support can be gold or the economic power of that country.
But these currencies that we know of have always had two major weaknesses, which include "the possibility of them being controlled by governments" as well as "the possibility of printing without backing". These two weaknesses, when combined with the inefficiency of governments in managing their economies, lead to rampant inflation and economic crises, such as the 2008 global economic crisis.
It was in late 2008 that Bitcoin was born as the first cryptocurrency, a currency that has neither of the two weaknesses of common currencies, namely, it is decentralized and cannot be controlled by any person, company, institution or government. Secondly, the total number of bitcoins is a maximum of 21 million and can not be added, and for these two reasons, it is attractive to many people, especially the rich, and of course we see that its attractiveness is increasing every day.
Of course, to date, about 17 million of the 21 million bitcoins have been mined, and there are only 4 million more bitcoins to be mined, which are predicted to be mined by miners by 2140.
But what is the backing of Bitcoin or other cryptocurrencies?
This question is a bit difficult to answer, because even these seemingly backed currencies have been repeatedly misused by governments and central banks around the world and printed without backing, so perhaps a little can be said about the traditional meaning of the word. To reconsider support.
Even the total gold reserves in the world today that are traded are only 20 percent real and 80 percent are contractual, so even the intrinsic value of things like gold and silver can be looked at more deeply and differently.
If we want to look at bitcoin with the traditional meaning and definition of the word backing, we have to accept that bitcoin has no backing, but if we want to look at the intrinsic value or backing of bitcoin as a currency with a different and new look, we can say that value Bitcoin is because people have accepted it and are willing to pay a price to buy it.
As soon as Bitcoin is uncontrollable and does not exceed 21 million, or because of the use of blockchain technology (here we will explain the concept of blockchain), there is no possibility of any kind of fraud and error in it, there can be reasons. Be worth it.
In addition to these reasons, the intrinsic value of a unit between coins can be calculated from the price of electricity and the time a miner (hereinafter explaining the concept of miner and mining) to extract a bitcoin, as well as the depreciation of its mining equipment, because today Bitcoin is mined or produced and traded by miners and, like other currencies or commodities, can be traded on Forex, and its market price is ultimately determined by the trade-off between supply and demand.
However, it must be admitted that these cryptocurrenciessuch as Bitcoin, Ethereum, etc. are fully accepted in the world today, and there is a huge wealth in the market of these currencies.
For example, today, in April 2021, when I am compiling this article, the total value of the bitcoin market has reached over 1000 billion dollars! The total value of the Ethereum market is $ 238 billion and the total value of the Ripple market is US $ 27 billion.
Of course, one point must be kept in mind, and that is that because these cryptocurrencies are limited in number, so the rich of the world with their huge currencies, have the opportunity to influence the market of these currencies and can speculate on these cryptocurrencies and prices Virtually up or down, which is unprecedented in the history of bitcoin, so you have to be very careful and scientific in buying and selling these currencies.
Definition of BLOCKCHAIN technology in simple language
Blockchain is a decentralized system.
Blockchain is a system for recording information and reporting, without the possibility of loss or manipulation of information.
Suppose in a group of 100 people, one person raises his bank payment bill and the rest of the people take pictures of it with their mobile phones, if this person manipulates the bill and changes its information in the future, it will be acceptable to the rest. No, because the original copy of the bill is available to the rest of the group. The owner of the bill can only cheat if everyone's cell phones are taken and the photos are deleted.
This might be practical for this example, but if the people in this group were 100 million instead of 100, it would have been almost impossible to take everyone's cell phones and take pictures.
This is perhaps the simplest example to illustrate how blockchain technology works. In fact, in the blockchain system, it is the users of the blockchain network who are responsible for maintaining and verifying the information. You will also have access to a copy of the information when you connect to the Blockchain network and become part of this system.
The word blockchain is actually a combination of the two words (BLOCK) and (CHAIN), which generally means a chain of information blocks. Each block can contain specific information encoded by the hashing system.
Blockchain and Bitcoin are twin brothers because they were both born at the same time. In the Bitcoin cryptocurrency, transaction information is stored by China Blockchain technology, and in fact each block of information contains transaction information.
But although the blockchain system was first used in the design of the Bitcoin, its use is much broader than this particular case, and it can be used wherever needed to manipulate information or Use data loss to zero.
One of the most important advantages of Blockchain technology is the problem of decentralization, which means that the system does not need a central regulator to store information and prevent its manipulation, and this task is the responsibility of each user. Therefore, it can be said that the Blockchain completely eliminates the need for "trust", and therefore, if this technology is used in other matters, it can reduce the possibility of fraud and error to zero.
What does mining of bitcoin, Ethereum or other cryptocurrencies mean?
Mining of cryptocurrencies such as Bitcoin and Ethereum simply means that you are involved in helping these algorithms perform transactions and subsequently receive rewards from them.
Simply put, you are using a miner or a computer to help these algorithms perform and verify their transactions, and in return for the time and electricity you consume and the amortization of your miner or computer, this Algorithms reward you with the same digital currency.
It should be noted, however, that not all cryptocurrencies can be mined, and only certain currencies such as Ethereum and Bitcoin can be mined.
What is a MINING POOL and what are the best bitcoin mining pools?
As we mentioned before, in order to extract a currency code, you must participate in the verification of the transactions of that cryptocurrency algorithm and provide your processing resources to that cryptocurrency, and in return, that cryptocurrency will reward you with its own kind. But this reward is proportional to the amount of processing resources you have provided to that cryptocurrency.
For example, if you extract bitcoins with a bitcoin miner with a 2TH / S hash rate, you will have far more returns than someone who mines bitcoins with a 1TH / S hash rate, and this extra return is more than It will be 2 times and has no linear ratio. This has led to the emergence of mining pools. but why ?!
The answer is simple, when you are faced a system that the more powerful processing resources you provide, the reward will increase exponentially, then the competition over which person or team will provide the most processing resources to the system And thus mining pools of bitcoin and other cryptocurrencies are created.
The Bitcoin Mining Pool is a virtual community where everyone shares their resources and shares them with the Bitcoin network, and when the pool receives its reward from the Bitcoin network, it Divides its members according to the amount of processing resources provided by each member to the pool.
If individuals in a pool decide to spend their resources individually on bitcoin mining instead of pooling their resources in one pool and submitting it to the bitcoin network, they will receive a much lower reward than when they were a member of the pool. Because a mining pool gathers all the processing power of all the members and dedicates it to the bitcoin network together, it can receive the most rewards from the network, and that is why mining pools are created.
For this reason, today, if you want to extract bitcoin or any other cryptocurrency, you must connect to one of the bitcoin mining pools or that cryptocurrency, otherwise your efficiency will be drastically reduced.
Below are the largest bitcoin mining pools based on their share of the hashtag of the entire Bitcoin network in the form of a chart:
What is a Bitcoin Miner or Bitcoin Mining Machine?
As mentioned earlier, to mine or extract bitcoins or other cryptocurrencies that can be mined, you must be connected to a bitcoin mining pool or other cryptocurrencies by a device capable of conducting digital transactions and start mining.
In the early days of bitcoin, people who wanted to extract bitcoins generally mined bitcoins from their personal computers. As time went on and the number of miners increased, people who looked at this issue more professionally began to optimize computers for mining, and generally provided computers with very powerful graphics cards and processors so that they could do it faster. Mine bitcoins and earn more money.
But as time went on and it became a defined business, it was no longer economical to use computers to mine bitcoins because many of the components of a computer had virtually no effect on mine speed, and the mining burden rested solely on the graphics card and CPU, and the rest of a computer that was built for mining purposes only was a bit of an extra expense, and if it was a device built just for mining, it could be a lot cheaper.
So it was not long before the first bitcoin miners, designed solely for bitcoin mining, came on the market, and because using them to mine bitcoins was much more cost-effective than a computer with the same mining performance. Bitcoin, Bitcoin miner devices were very popular.
Today, these miner devices are each customized for one or more digital currencies. For example, there are devices that extract only bitcoins and they are called bitcoin miners, or for Ethereum, there are special miners that extract only Ethereum and they are called Ethereum miners.
Some miners also have the ability to mine multiple cryptocurrencies and can be used to mine any of those cryptocurrencies at any time, depending on their policies. Miner devices, and especially bitcoin miners, are becoming stronger and more efficient today as fast as other digital technologies are advancing, and the companies that make these miners are in fierce competition with each other.
Is mining with a graphics card or mobile phone affordable?
To answer this question, we must first note that the graphics cards of computers as well as mobile processors are different in terms of processing power of cryptocurrency transactions or the same hash rate, so the ability of computers and mobile phones to extract Bitcoin or Ethereum or other minable cryptocurrencies are different.
If we want to use the power of a computer graphics card to extract bitcoins or Ethereums or other cryptocurrencies, we should preferably assemble computers for mining. For this purpose, it is preferable to mount a large number of very powerful graphics cards, also known as GPUs, secretly on a computer so that we can get a high hash rate from that system. (Like the picture above)
But does it make sense? According to our experts, this is not very logical! but why !?
The answer is very simple, because the burden of conducting bitcoin or Ethereum mining transactions or other cryptocurrencies is borne only by the computer graphics card and CPU, and other parts of the computer have no role in the transaction, so we can say that the cost When a person spends on buying other parts of a computer, there are overhead and additional costs.
Therefore, if the purpose of providing a computer is simply to extract bitcoin or Ethereum or ... and a person wants to provide a computer with, for example, 100 very powerful and secret graphics cards, this is not logical and it is better to use Bitcoin or Ethereum Minor devices that are built solely for this purpose, in which case they can get higher returns at the same cost.
The core of Miner's specialized devices is simply a graphics card and power supply to power it, as well as a fan to cool it, so it costs less and consumes less power than a computer with the same bitcoin mining efficiency. Finally, it significantly reduces the cost of bitcoin mining.
But if a person provides a very powerful computer in terms of graphics card and CPU, only for personal and public use, and also wants to use the power of his computer graphics card for bitcoin mining, it is not unreasonable, but One has to keep in mind that in order to extract bitcoin, his computer must be constantly working at its maximum power, and this causes all the parts and components of that computer to be consumed at the same time, and the life of the computer will be much shorter. .
The story is the same with mobile mining, and if we consider the depreciation of mobile and, of course, the slowdown when using it, we find that using mobile for mining cryptocurrencies is almost not logical.
Iman Habibi