Low energy costs, high inflation, and restrictive capital controls have pushed residents of Argentina to mine bitcoin in their homes.
Bitcoin miners in Argentina are taking advantage of the country’s shrinking economy and degraded currency to reap oversized returns, powered by cheap, government-subsidized energy, Bloomberg reported.
“Even after the Bitcoin price correction, the cost of electricity for anyone who extracts from their home is still a fraction of the total income generated,” said Nicolas Bourbon, who previously mined bitcoin in Buenos Aires. Bloomberg.
Miners are taking advantage of Argentina’s cheap residential electricity due to intense government subsidies looking to win 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,” Bourbon explained. “At the moment, the income is very high.”
Bitcoin’s parallel exchange rate in the country sells for a high price, as Argentines have substantial currency restrictions placed on them and desperately looking for better stores of value as their fiat currency – the peso. According to Bloomberg, the parallel bitcoin exchange rate in the country traded at around $ 63,000 on Sunday, a 75% premium over the official rate of $ 36,000.
In addition to local Argentinian owners, international mining companies are also taking steps to take advantage of the situation. Last month, the Canadian company Bitfarms Ltd. reached a deal to pull 210 megawatts of electricity from an underutilized Argentinian natural gas plant, by Bloomberg.
“We were looking for places that over-built their power generation systems,” Bitfarms chairman Geoffrey Morphy said. Bloomberg. “Economic activity in Argentina is declining and electricity is not fully used. So it was a win-win situation.
Although electricity in Argentina is much cheaper than in neighboring countries, the trend of home mining is starting to accelerate in South America. For example, in Brazil, mining interest in bitcoin has peaked for three years, according to data from Google Trends, a local outlet. Do Bitcoin Portal recently reported. Growing unemployment, a shrinking economy and a devalued currency since the outbreak of the pandemic have left Brazilians looking for alternative sources of income by mining bitcoin at home.
As a decentralized, unauthorized, government-independent currency, bitcoin offers an alternative to people subject to the monetary policies of interventionist governments around the world.
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