Miners of cryptocurrency bitcoin in Argentina are enjoying oversized returns courtesy of cheap and government-subsidized energy, as they take advantage of the country’s collapsing economy and debased currency.
According to Bloomberg, Nicolas Bourbon, a bitcoin miner from Buenos Aires said, “Even after bitcoin’s price correction, the cost of electricity for anyone mining from their house is still a fraction of the total revenue generated,” affirming the notion.
The Argentinean government is seeking to win political points with voters and is offering subsidies resulting in cheap residential electricity costs that in turn, are being capitalized by cryptocurrency miners.
Revenues are high right now
Bourbon, elaborating on the matter, said that while the crypto that miners are able to produce is sold at a parallel exchange rate, the amount they pay for energy is subsidized and that results in very high revenues at the moment.
The bitcoin parallel exchange rate in Argentina also offers a large premium, standing around $63,000 which is 75% higher than the official rate of $36,000.
Due to the fact that the people of Argentina have been imposed with substantial currency restrictions, they are desperately seeking better stores of value than their fiat currency – the Peso. As it turns out, bitcoin is the answer to their desperation.
International companies join the ‘party’
Apparently, it is not just the local Argentine homeowners that are taking advantage of the current situation as international mining groups are also taking part in the action.
Last month, Canada’s Bitfarms Ltd. was able to secure a deal to utilize 210 megawatts of power from an underused Argentinean natural gas plant.
Bitfarms President Geoffrey Morphy said they are looking for places that have overbuilt their electrical generation systems, adding “Economic activity in Argentina is down, and power is not being fully utilized. So it was a win-win solution.”
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