Bitcoin mining is a cash-flow generating business, and the more of it there is, the more people will be attracted to it, making it a lucrative, low-risk business. The mining sector in Argentina has been booming over the last year, with miners from China, Spain, the US, and Brazil flocking to this South American country. The problem, however, is that coal and electricity are basic necessities in Argentina, and obviously, the mining sector will not be adding to the national energy supply in the near future.
The Bitcoin mining boom in Argentina has been one of the most surprising phenomena of 2017. In December, bitcoin and other cryptocurrencies experienced a record-breaking price increase, pushing the value of total bitcoin supply past $20 billion. This is up from a previous high of $16 billion in November. In January, the price increased again, reaching $30 per coin, making it the first time in the history of bitcoin that its value has increased by a factor of two.
As Bitcoin mining has grown progressively more expensive, some people have been put off from Bitcoin mining. However, according to a report from Argentine media outlet Noticias Argentinas, Bitcoin mining in Argentina is now more profitable than ever. Following the bitcoin price boom in 2017, some miners are seeing returns of $150 per day, reports Bitcoin.com.. Read more about bitcoin and let us know what you think. Argentina, a depressed South American country, is experiencing a resurgence in cryptocurrency mining thanks to artificially low electricity tariffs backed by subsidies from the country’s government. This fact, combined with foreign exchange controls and the ability to sell mining assets at a higher price than the official rate, is attracting more and more people to the mining sector.
Argentina has a mining boom
Argentina is experiencing a mining boom thanks to highly subsidized electricity tariffs and exchange rate controls that allow miners to sell mined bitcoins at a higher rate than the official rate set by the government. The increased interest in crypto-currency mining is also due to capital controls in Argentina, which prohibit citizens from exchanging more than $200 in the local fiat currency, the peso; this has thus created an increased demand for other convertible currencies to protect their purchasing power from inflation. According to Bloomberg, the subsidies are so high that Argentine mining companies are still making a profit, even with the recent drop in prices. Nicolas Bourbon, the miner, explains: Even after bitcoin price correction, electricity costs for those who mine at home are only a fraction of their total income. This fact has also attracted the interest of foreign mining companies to enter the Argentinean market in order to benefit from these subsidies. Bitfarms, a Canadian mining group, has struck a deal to generate power from a local power plant at a price well below most comparable alternatives. Jeffrey Morphy, president of Bitfarms, said: We looked for places that had rebuilt their power plants. Economic activity in Argentina is declining and electricity is underutilized. So it was a win-win situation.
Sustainability at risk
Argentina is the latest country to turn to cryptocurrencies and mining to bring more financial and economic freedom to its economically challenged citizens, as Iran and Venezuela have done before. But this mining boom could well have implications for the integrity of the energy system, depending on the impact of the activity. That’s what happened in Iran, which recently had to take measures to stop bitcoin mining until the 22nd. September to be forbidden by constant power outages. In Iran, minors must be registered to work legally. However, it is estimated that more than 85% of minors do not have a license. What do you think of the recent cryptocurrency mining boom in Argentina? Tell us what you think in the comments section below. Photo credit: Shutterstock, Pixabay, Wiki Commons Denial: This article is for information only. It is not a direct offer or invitation to buy or sell, nor is it a recommendation or endorsement of any goods, services or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author shall be liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services referred to in this article.The country of Argentina has abundant cheap electricity, and that’s the key to the bitcoin mining industry’s growing success in the South American nation. Once the home of the first bitcoin mining equipment manufacturer, the country is now home to 25 percent of the world’s mining operations. (It ranks behind China, Iceland, and the U.S.). Read more about new cryptocurrency and let us know what you think.
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