Cryptocurrency mining has become an attractive venture for Argentinians due to energy subsidies and the rising inflation levels in the country.
Cryptocurrency mining booms in Argentina
Cryptocurrencies have gained adoption in several parts of the world. However, some of the biggest adoptions have come from countries dealing with hyperinflation. In recent years, Argentina, Venezuela, Nigeria and Zimbabwe are some countries with high crypto adoption due to rising inflation levels.
Argentinians have now found another way of making more money via the cryptocurrency market. Crypto mining is booming in the South American country thanks to generous electricity subsidies from the government.
Nicolas Bourbon, an experienced cryptocurrency miner, revealed this to Bloomberg earlier today. He stated that despite the drop in Bitcoin’s price, cryptocurrency mining remains lucrative due to the cheap electricity. Argentinians are enjoying cheap electricity thanks to a policy that allows the citizens to receive substantial electricity subsidies from the government. The subsidy sees power bill for users only accounting for 2-3% of an average monthly income.
Bourbon added that although the cryptos miners generate is sold at the parallel exchange rate, they pay for energy at a subsidized rate. Hence, their revenues are very high at the moment, he concluded. Argentinians are leveraging this opportunity because electricity bills in other Latin American countries like Brazil, Colombia, or Chile are at least twice as much as Argentina.
Inflation promotes crypto mining adoption
The massive inflation in Argentina is a key reason why cryptocurrency mining has gained huge adoption in Argentina. The citizens are looking for alternative assets to serve as a hedge as annual inflation touches 50%.
The low electricity charges in Argentina have seen some of the leading Bitcoin mining farms take notice. Bitfarms has previously revealed that it intends to use a local power plant in the country to draw up to 210 megawatts of electricity. Bitfarms president Geoffrey Morphy told Bloomberg that “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.”
Argentina could become a crypto mining hub, especially with Iran banning crypto mining activities for four months. China is also looking to crack down on cryptocurrency mining activities. As such, crypto mining companies could move to countries with favorable regulation and cheap power.