The availability of subsidized commercial electricity is making Argentina an increasingly fertile ground for bitcoin mining. Miners make significant profits from the exploitation of this cryptocurrency. The $ 200 limit for currency conversions and hyperinflation are indeed pushing locals to seek other alternatives with Bitcoin mining. The famous crypto has therefore become in Argentina a leading means to increase its income.
Energy subsidies benefit Bitcoin mining
Massive inflation and cheap subsidized electricity have made cryptocurrency mining in Argentina very attractive. According to Bloomberg, economic uncertainty and the electricity subsidy have prompted many Argentines to turn to bitcoin mining.
For Nicolas bourbon, an experienced miner, the cost of electricity today for people who mine from their homes is just part of the total income that was generated. This is due to a policy put in place by the Argentine government, which allows the population to take advantage of large electricity subsidies. So only 2 to 3% of monthly income of an Argentinian is allocated to the electricity bill.
Meanwhile, in countries like Colombia, Brazil or Chile, electricity costs twice as much. The Argentines, on the other hand, do their best to fight inflation desperately looking for alternative assets to serve as a hedge. It should be noted that inflation increases by 50% every year in the country.
Moreover by requiring foreigners not to be able to exchange their pesos beyond 200 dollars, the government is making things a little worse. This situation only makesincrease the depreciation of the Argentine peso. Bourbon explains that the electricity subsidy allows miners to have very high incomes since the crypto generated by mining is directly sold at the parallel exchange rate.
Large companies are interested in Argentina
The explosion of mining activities in Argentina did not fail to attract the attention of large international mining companies. This is the case of Bitfarms one of the world leaders in mining. The company plans to draw up to 210 megawatts of electricity using a power plant local electricity in Argentina.
Geoffrey morphy chairman of Bitfarms to tell Bloomberg that his company is looking for places with overbuilt their power generation systems. He believes that electricity in Argentina is not fully utilized while economic activity in the country is declining. For him, everyone could come out a winner from this situation both mining companies and the local economy.
The country offers an attractive rate of $ 0.22 per kWh, which is more advantageous than the average of 0.06 dollar granted in the sector. However, these grants will not cover all of the company’s operations. Even though the subsidies granted by the Argentine government are described as “ridiculous”, this does not prevent minors from enjoying it.
Although local politicians are divided on the merits of electricity subsidies, bitcoin mining in Argentina will remain a fairly lucrative business for quite a while in the country. Argentina could soon become like Iran which has chosen to invest its surplus electricity production in Bitcoin mining to regulate its market.
The comments and opinions expressed in this article are those of the author alone, and should not be considered as investment advice. Do your own research before making any investment decisions.