Argentina, the ailing South American country, is experiencing a cryptocurrency mining resurgence due to artificially low power rates maintained by subsidies from the national government. This fact, alongside exchange controls and the possibility of selling obtained assets at a higher exchange rate than the official one, is enticing more and more individuals to enter the mining business.
Argentina Is Experiencing a Mining Boom
Argentina is experiencing a mining boom, due to the highly subsidized power rates and exchange controls enabling miners to sell their mined bitcoins at a higher exchange rate than the official one established by the government.
The surging interest in mining cryptocurrencies also has to do with the fact that Argentina is subject to capital controls that forbid citizens from exchanging more than 200 dollars for their local fiat currency, the peso; this, consequently, has also caused a rise in the demand of other convertible currency to safeguard their buying power from inflation.
According to Bloomberg, the subsidies are so high that even with the recent crash in prices, Argentinian miners are still in the green. Nicolas Bourbon, a miner, declared:
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.
This fact has also awakened the interest of foreign mining companies in entering Argentina to take advantage of these subsidies. Bitfarms, a Canada-based mining group, secured a deal to mine using power from a local plant for a far lower rate than most comparable alternatives. Geoffrey Morphy, Bitfarms’ president, stated:
We were looking for places that have overbuilt their electrical generation systems. Economic activity in Argentina is down, and power is not being fully utilized. So it was a win-win situation.
Sustainability at Stake
Argentina is the latest country to turn to crypto and mining as a way of gaining more financial and economic freedom for its citizens while facing economic difficulties, as Iran and Venezuela did before. But this mining boom could well affect the integrity of the power grid, depending on the impact the activities have.
This has been the case in Iran, which just recently had to take action banning bitcoin mining until September 22, due to the constant blackouts the power grid is experiencing. Miners in Iran need to be registered to operate legally. However, it is estimated that more than 85% of miners remain unlicensed.
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