Chinese bitcoin miners are entering Iran in a bid to lower costs and in preparation for a potential crackdown in China.

Bitcoin mining has undergone a tremendous change in its landscape in the last two years. Bitmain, formerly the largest manufacturer of bitcoin miners, lost its dominant place at the top of the food chain.

This happened for several reasons, but the two most impactful were likely the decision to back Bitcoin Cash at the height of the 2017 bull run, along with major problems with mining chip production.

These financial problems caused Bitmain to call off its Hong Kong-based IPO last year. The company is currently involved in a legal battle with former employees who left Bitmain and formed a rival mining pool after a dispute over their non-compete agreement. Despite the recent streak of bad luck, Bitmain is now planning on a US-based IPO.

Along with the decline of Bitmain, official sentiment on bitcoin mining from Chinese authorities has shifted dramatically, sparking rumors of crackdowns and bans. China has the world’s highest concentration of bitcoin miners and mining pools, who have begun preparing for the worst.

Chinese regulators are calling for an orderly exit from bitcoin mining, at the same time the Chinese central bank has just announced their own cryptocurrency in response to Facebook’s Libra.

Since the future of bitcoin mining in China seems bleak, Chinese miners have started looking for greener pastures overseas. One of the places they have seen as an attractive destination is Iran, where electricity is also extremely cheap. The only problem is that the Iranian government has already claimed bitcoin mining is illegal.

Iranian officials have already confiscated thousands of Bitcoin mining rigs and arrested miners. Mining has reportedly put a major strain on the nation’s electrical grid. To add fuel to the fire, this week Iran’s central bank announced that buying and selling bitcoin is illegal.

This black market aspect hasn’t deterred miners, however, who have started smuggling mining rigs into the country, bribing customs officials to avoid confiscation. Due to the increased presence of Chinese miners in Iran, we may see a change in policy.

There have been rumors that Iran’s Power Ministry may institute a tariff or tax on mining operations in the near future, although what that would look like remains to be seen. This would legitimize mining operations, and at least take them out of the shadows as they exist at the moment.

One thing seems certain, as long as power remains cheap in Iran and Chinese miners don’t feel safe in China, we will continue to see this trend emerge. Iran is in a position to capitalize off of a new technology sector of its economy.

The Chinese miners don’t seem to be slowing their efforts to set up shop in Iran, so it will be very interesting to see what happens. The fact that they are moving out of China amid uncertainty is decentralizing bitcoin mining overall, which can only be a good thing for Bitcoin.