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Low electricity rates and the perennial crises with inflation and foreign currency have made Argentina a hotspot for cryptocurrency mining.
Crypto miners in Argentina reap huge profits from mining Bitcoin and other cryprocurrencies, analysts tell Bloomberg.
Over the past decade, Argentina has been in and out of currency, government bond default, and inflation crises more than most of the countries in the world. Interventionist government policies in the energy sector, with subsidized power for households, have made electricity prices in Argentina cheaper than the prices in most other South American countries, including Colombia, Brazil, Chile, and Peru, according to Bloomberg estimates based on data from Balanz Capital Valores.
Argentinian households and individuals pay a lot less for electricity bills than those in the neighboring countries, which incentivizes people to mine cryptocurrencies in Argentina. In addition, strict foreign currency controls which do not allow buying too many U.S. dollars also push people to look for alternative ways to generate wealth.
“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,” Nicolas Bourbon, who has mined cryptocurrencies from Buenos Aires, told Bloomberg.
Argentina’s low electricity rates are also attracting Bitcoin mining operations to the country.
For example, Bitfarms, a Bitcoin mining company founded in 2017, announced in April a deal with a local utility-grade private power producer under which Bitfarms can draw up to 210 megawatts (MW) of electricity at its discretion. The initial term of the contract is eight years. During the first four years, the effective cost of the electricity will be US$0.022 per kilowatt-hour (kWh). The new mining facility will be very close to the utility, so the electricity contract does not involve any interconnection with the local power grid, which has the advantage that electricity cannot be curtailed during times of unusually high usage, Bitfarms said. The Argentina facility is estimated to have a 45-percent lower break-even cost to mine a Bitcoin than the facility in Québec, Bitfarms says.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com