Low energy costs, high inflation, and restrictive capital controls have led Argentines to mine Bitcoin in their homes.
Bitcoin miners in Argentina are taking advantage of the country’s shrinking economy and its depreciated currency to generate oversized returns powered by cheap, government-subsidized energy, Bloomberg reported.
“Even after the Bitcoin price correction, the cost of electricity is still a fraction of the total income for anyone mining from their home,” Nicolas Bourbon, who has bitcoin mining experience from Buenos Aires, told Bloomberg.
Miners use Argentina’s cheap residential electricity due to intense government subsidies trying to gain political points from voters.
“The crypto that miners generate is usually sold at the parallel rate, but the energy is paid for at a subsidized price,” explained Bourbon. “Right now the income is very high.”
Bitcoin parallel rate in the country is selling at a heavy premium as Argentines have significant currency restrictions and are desperately looking for better stores of value than their fiat currency – the peso. According to Bloomberg, Bitcoin’s parallel exchange rate in the country traded at around $ 63,000 on Sunday, a 75% premium to the official rate of $ 36,000.
In addition to local Argentine homeowners, international mining companies are also taking action to capitalize on the situation. Last month, Canadian Bitfarms Ltd. secured according to Bloomberg, a contract for the extraction of 210 megawatts of electricity from an underutilized Argentine natural gas plant.
“We were looking for places that had their power generation systems built over,” Bitfarms President Geoffrey Morphy told Bloomberg. “Economic activity in Argentina is declining and energy is not being fully used. So it was a win-win situation. “
Although electricity in Argentina is significantly cheaper than in neighboring countries, the home mining trend is picking up speed in South America. In Brazil, for example, interest in Bitcoin mining has reached a three-year high according to data from Google Trends, the local outlet portal Do Bitcoin recently reported. Growing unemployment, a shrinking economy, and a depreciated currency since the pandemic broke out have led Brazilians to seek alternative sources of income by mining Bitcoin at home.
As permissionless, non-governmental, decentralized money, Bitcoin offers an alternative for people around the world who are under the monetary policy of interventionist governments.
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