Why Crypto Mining Is Soaring in Argentina

Although the price of the crypto asset Bitcoin is skyrocketing from 2020 to 2021, it is concerned about its impact on the environment because it consumes a large amount of power for mining to create a currency. In Iran, mining is banned until September 2021. Argentina is attracting attention as a mining location as countries tighten cryptocurrency regulations.

In Argentina, currency devaluation has been repeated, and the economic crisis continues, including basic hyperinflation, the COVID-19 pandemic, and a three-year recession. Naturally, confidence in the Argentinean currency, the peso, is growing in demand for a currency in addition to its lost native currency. However, foreign currency purchases were restricted by capital regulations in 2019. Among these, cryptocurrency is attracting attention.

Argentina is characterized by cheap electricity despite its dependence on imports of natural water. This is because a subsidy is applied to electricity for housing because politicians are promoting cheap electricity as a measure to get votes. If you look at the ratio of average electricity rates that account for the median monthly income, Argentina’s revenue is about 2%. Even compared to countries such as Peru, Chile, Brazil and Colombia, Argentina’s power weakness is clear.

Due to currency restrictions, pesos can only be exchanged for dollars up to $200 per month. Therefore, along with the weakness in electricity, mining of cryptocurrencies, including Bitcoin, is on the rise in Argentina. Canadian mining company Bitfarm also paid attention to the situation in Argentina and signed a contract with an Argentine power plant to directly access 210 MW of electricity. Bitfarm said Argentina’s economic activity was stagnant and the electricity was not fully utilized, and the deal was in favor of both sides. Related information can be found here.