BTC miners in Argentina are thriving by taking advantage of cheap, subsidized energy.
Countries with low utility rates have been great spots for crypto miners, and the resurgence of capital controls is boosting profits for miners in Argentina. The news was first reported by Bloomberg, later republished in the Buenos Aires Times.
Miners Taking Advantage of Cheap Electricity
Experts like Nicolás Bourbon, a crypto-miner in Argentina, have said this is an opportunity to take advantage of the new policies implemented by the local government.
“Even after Bitcoin’s price correction, the cost of electricity for anyone mining from their house is still a fraction of the total revenue generated. Miners know the subsidies are ridiculous. They simply take advantage of it.” —Said Bourbon.
Compared to Colombia, Chile, and Brazil, Consumer electricity bills are barely 2 – 3% of the average monthly income in Argentina, making it one of the cheapest countries in the continent next to Venezuela.
Bitfarm Targeting Argentina
Bitfarm Ltd, a Canadian mining firm, signed a power purchase agreement with a private Argentinian power producer —enabling the firm to extract cryptocurrencies in Patagonia in 2022, with the use of a total of 55,000 machines. The contract will last eight years and has an effective cost of 0.022 per kilowatt/hour.
“We were looking for places that have overbuilt their electrical generation systems. Economic activity in Argentina is down, and power is not being fully utilised. So it was a win-win situation.” Bitfarms’ President Geoffrey Morphy said in an interview.
Cheap electricity in Argentina has been tagged as a policy intended to win votes for the next legislative elections by many experts, causing tensions between other political parties. But miners are now seeing this as a great opportunity to reap profits and survive the expanding hyperinflation.
Argentinians Embracing Crypto Amid Economic Downturns
Argentina’s economic downturns have significantly propelled cryptocurrency usage. The current inflation rate is about 50% annually, and citizens can legally convert only 200$ per month. Argentinians now embrace cryptoassets as an inflation hedge.
Cryptocurrency accounts on Binance and Coinbase soared in the country while the Argentinian Peso devalues with time. It shouldn’t be surprising that miners are now choosing the country to take advantage of cheap electricity.
“The crypto that miners generate is typically sold at the parallel exchange rate, but the energy is paid for at a subsidised rate. At the moment, revenues are very high.” Bourbon said.