Bitcoin miners profit from the country’s interventionist economy’s inefficiencies, low-cost energy subsidies are driving the expansion of Bitcoin mining in Argentina.
The Expansion Of Bitcoin Mining In Argentina
Bitcoin miners in Argentina are benefiting from inefficiencies in the country’s interventionist economy; low-cost energy subsidies are fueling the expansion of bitcoin mining, which is motivated by memories of currency crises and powered by government-subsidized electricity.
While several nations have witnessed crypto mining booms this year, ultra-low utility rates and the reappearance of capital constraints in the South American country are helping miners boost profitability. Many analysts saw it as just another illustration of Argentines’ enduring ability to exploit the country’s unconventional policies
“Even with Bitcoin’s price drop, the cost of power for someone mining from their home is still a fraction of the overall cash generated,” Nicolás Bourbon, a Buenos Aires-based cryptocurrency miner, said.
Cryptocurrencies have long been promoted in Argentina as a means for residents to hedge against cyclical economic crises such as currency depreciation, defaults, hyperinflation, and now, a three-year recession exacerbated by the epidemic.
Aside from cheap power, the recent return of foreign-exchange controls has given Argentines barred from purchasing dollars even more incentive to mine digital tokens, as surging demand for non-peso assets has sent the value of Bitcoin skyrocketing to nearly 5.9 million pesos in unofficial markets as of Sunday, versus about 3.4 million pesos at the official rate.
Miners profit from Argentina’s long-standing household electricity subsidies. The program is meant to score political points with voters, but it is causing friction within the ruling Peronist alliance. Consumer power expenses account for just approximately two to three percent of the typical monthly income.
The peso is currently almost 70% lower than the official rate. Inflation is around 50% per year, and currency restrictions enable individuals to legally exchange just US$200 per month.
Bitfarms In Canada Establish A Local Mining Business
Bitfarms Ltd. of Canada said last month that it had acquired an agreement to connect directly into a local power plant to draw up to 210 megawatts of natural gas-powered energy. The price is significantly lower than the wholesale market pricing for industrial clients, which is roughly $0.06 per kWh.
“Selling extra power to Bitcoin miners throughout part of the year makes sense for some power providers with easy access to gas,” Fernández adds. Argentina’s Energy Ministry spokeswoman declined to comment on the arrangement.