Bitcoin miners in Argentina are taking advantage of the country’s shrinking economy and its debased currency to reap oversized returns, fueled by cheap, government-subsidized energy. Bloomberg reported.
“Even after the Bitcoin price correction, the cost of electricity for anyone mining from home is still a fraction of the total revenue generated,” said Nicolas Bourbon, who has experience mining bitcoins from Buenos Aires. Bloomberg.
Miners are profiting from Argentina’s cheap residential electricity due to heavy government subsidies seeking to score political points with voters.
“The crypto that miners generate is typically sold at the parallel exchange rate, but energy is paid for at a subsidized rate,” explained Bourbon. “At the moment, the income is very high.”
The country’s parallel exchange rate for bitcoin is selling at a hefty premium, as Argentines have substantial currency restrictions imposed and desperately seek better stores of value than their fiat currency, the peso. According to Bloomberg, the parallel exchange rate of bitcoin in the country was trading at around $ 63,000 on Sunday, a 75% premium to the official rate of $ 36,000.
In addition to local Argentine owners, international mining companies are also taking steps to benefit from the situation. Last month, Canada’s Bitfarms Ltd. secured a deal to extract 210 megawatts of power from an underused Argentine natural gas plant, according to Bloomberg.
“We were looking for places that have overbuilt their power generation systems,” Bitfarms president Geoffrey Morphy said. Bloomberg. “Economic activity in Argentina has decreased and energy is not being used in its entirety. So it was a win-win situation. “
Although electricity in Argentina is much cheaper than in its neighboring countries, the trend towards domestic mining is starting to pick up in South America. For example, in Brazil, interest in bitcoin mining has reached a maximum of three years, according to data from Google Trends, a local media outlet. Portal Do Bitcoin recently reported. Rising unemployment, a contracting economy, and a devalued currency since the outbreak of the pandemic have left Brazilians searching for alternative sources of income by mining bitcoins at home.
As decentralized money, independent of the government and without permission, bitcoin provides an alternative to people subjected to the monetary policies of interventionist governments around the world.