Argentina’s government-subsidized electricity has made bitcoin mining more attractive, as people look for ways to get around capital controls.
This comes as Argentines use cryptocurrencies as a hedge against cyclical economic crises and a 3-year recession that has worsened during the pandemic, while lower energy costs and the return of capital controls have helped boost profits from Argentina’s mining operations.
“Even after the (Bitcoin) price correction, the cost of electricity for anyone mining from their home is still a small part of the total revenue generated,” said Nicholas Bourbon, who has experience mining cryptocurrency from Buenos Aires.
In addition to cheap electricity, the return of foreign exchange controls in recent years has given Argentines who are barred from buying dollars more incentive to mine cryptocurrencies, as the increased demand for foreign assets has driven Bitcoin to nearly 5.9 million pesos in unofficial markets. For about 3.4 million pesos at the official rate.
Argentina’s consumer electricity bills do not exceed 2 to 3 percent of the average monthly income, compared to about double that in other Latin American markets.
International mining companies are beginning to sense opportunities in Argentina, with Canadian Bitfarms saying it has secured a deal to tap a 210 megawatt local natural gas power plant in a bid to operate the largest bitcoin mining facility in South America.