Presented by Fractal Bitcoin

Welcome to Mining Wednesday, where Blockspace covers the intersection of bitcoin mining, energy, and AI.

Today, news that Hut 8 subsidiary American Bitcoin is going public via a reverse merger. Plus, we have an interview from Masih Alavi, the CEO of Iranian bitcoin mining company ViraMiner. Iran harbors a novel bitcoin mining scene, one where illicit retail miners outnumber above-board actors by as much as 400 to 1, according to Alavi’s estimates.

Plus, Chart of the Week and more!

It’s about a 6 minute read. But before we dig in…

We’ll be in Toronto this week for Consensus 2025! Stop by the Bitcoin Mining Stage to say hello!

Market Opens

Trump family-linked American Bitcoin to go public in merger with Gryphon

Hut 8’s Trump-linked subsidiary, American Bitcoin, is headed to public markets. 

The company has agreed to a stock-for-stock merger with publicly traded Gryphon Digital. Gryphon Digital will acquire American Bitcoin in a reverse merger, and upon completion, the combined company will operate as American Bitcoin, trading on Nasdaq under the ticker ABTC. The transaction could close as early as Q3 2025.

Under the agreement, American Bitcoin stock holders will hold 98% of the new company to Gryphon Digital’s 2%.

American Bitcoin launched earlier this year as a subsidiary of Hut 8., whereby Hut 8 allocated 10 EH/s of its self-mining operations in exchange for an 80% stake in the company. 

Inside Iran’s thriving underground bitcoin mining scene

Bitcoin mining occurs at the farthest flung corners of the Earth, including countries you would never expect.

Take Iran, for example.

The country, strangled by international sanctions and under the boot of a theocratic autocracy, has a thriving underground bitcoin mining cottage industry. Iranians have long used cryptocurrency to breach the financial barriers erected by sanctions to make online purchases and to evade domestic capital controls. 

Bitcoin mining plays a critical role here, as Iranians can tap cheap electricity to mine bitcoin and then convert it to stablecoins like USDT for savings and online commerce. As a result, illegal, guerrilla mining is widespread in the country, taking place everywhere from residences to jewelry stores and office buildings. 

Underground mining is so large in Iran that ViraMiner CEO Masih Alavi estimates the market is near 2 GW, dwarfing legal mining’s 5 MW footprint. Now, if that figure sounds outlandish to you, you’re not alone – 2 GW is gargantuan, especially considering Iran produced roughly 42 GW in 2023.

Whether or not this figure is accurate, illegal mining certainly outweighs legal mining in Iran, so the country provides a fascinating case study as a country whose mining industry, humming away in the shadows, is dominated by retail actors.

The following transcript is excerpted from our recent Mining Pod with Masih Alavi, wherein he provides an overview of Iran’s unique bitcoin mining industry. 

Can you give us a brief overview of the current landscape of Bitcoin mining in Iran? Can you provide a rough estimate in megawatts, or an exact figure if possible?

Sure. Before the government officially got involved in the mining industry, there were about 300 megawatts of mining capacity operating in Iran. After the government stepped in, I recall that around three dozen people initially applied for mining licenses.

Later, approximately 700 applications were approved for starting mining projects. But in the end, only about 300 of those were officially authorized by the government to operate industrial-scale Bitcoin mining facilities. However, currently, only about 5 megawatts of that capacity is actually operational.

If we consider all the issued permits, they collectively represent around 400 megawatts of capacity, but most of it isn’t operational right now.

So there are only five megawatts of active, legal mining in Iran?

Yes, legally. Just five megawatts. But illegally, there’s approximately 2,000 megawatts—about two gigawatts.

Wow—two gigawatts? That’s a huge difference. What do those illegal mining operations look like? How are they drawing that much power, and how are they managing to get away with it?

Actually, I remember seeing photos from the U.S. where people were running mining machines in their basements. It’s similar in Iran. We call them "silent parts"—people try to connect their machines to the power grid before the electricity meter, so the usage doesn’t get recorded. That way, the government can't detect them.

They set up machines in their homes, and there are many of them. About two or three weeks ago, I saw an announcement from the government stating that they’ve discovered and fined around 800,000 illegal miners so far.

I also had a meeting just a few days ago with a division of the Energy Ministry called "Tavanir." They told us that some people are still running older machines like the Antminer M3 and S9 illegally. It’s really wild. The numbers they mentioned were quite shocking.

I blamed the government for this situation. They introduced flawed policies in the beginning, especially by setting the wrong electricity tariffs for the mining industry. They treat Bitcoin like it’s printing money—literally, like printing U.S. dollars—and imposed the highest electricity rates on miners.

Because of that, it became very difficult to get a license, which pushed many people into illegal operations. And with the ongoing sanctions, many people prefer to take the risk and run their machines in basements or other hidden places to make money.

So it’s cheap enough for residents to mine using S9s and M3s? I mean, these are machines that are completely obsolete at this point.

Yes. When you mine Bitcoin and convert it to Tether (USDT), and then convert that to Iranian rials, it's actually still profitable. Right now, even with an S9 or M3, you can make it work.

We talked about residential and basement mining, but what about industrial-scale miners? Do they operate small, scattered sites? Are there places they go to try to hide from the government? 

I don’t have exact statistics on that, but I’ve heard of many examples. Instead of basements, people are using other kinds of spaces. For instance, just a few days ago, the authorities discovered mining machines in a general storage facility—it was quite surprising.

They’ve also found miners in office buildings. I remember about two years ago, they even discovered mining machines in the basement of a currency exchange. It was a big news story at the time. The operators claimed it was just a data center, not a mining operation.

When the truth came out, it caused a scandal for the management of that office. So yes, right now, people are trying to mine wherever they can. As you know, Bitcoin is trading at around $84,000 to $85,000 right now.

People also believe the price will rise even more in the coming months. Meanwhile, due to the ongoing negotiations between Iran and the U.S. over sanctions and nuclear issues, the value of the dollar has temporarily dropped here. But people expect that to change—one bad headline, one negative comment from President Trump, for example, and the dollar could surge again.

People are preparing for this volatility. They want to survive. Because of the impact of sanctions, people are looking for alternatives—like cryptocurrency—to survive in this struggling economy.

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