Bitcoin Mining Booms in Argentina in the Wake of Growing Hyperinflation
Argentina is increasingly becoming the choice of Bitcoin miners because of the availability of cheap subsidized commercial electricity and controlled foreign exchange limit which help miners to make significant profits on Bitcoin mining. At a time when hyperinflation has forced citizens to look for a better alternative and a limit of $200 for currency conversion, Bitcoin has actively become a prominent way for people to save their earnings.
Earlier, Argentina’s growing inflation had led to a significant portion of the country turning to Bitcoin to use it as an inflation hedge. Now Bitcoin mining is proving to be a profitable investment. A miner from Buenos Aires explained why Bitcoin mining is a profitable investment in the region.
“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,”
A majority of Bitcoin mining in Argentina is home-based because of the cheap electricity cost. Miners sell their Bitcoin earnings at a parallel exchange rate helping them to cope with the growing hyperinflation.
Would Argentina Follow on Iran’s Footsteps?
Iran is going through a similar turmoil as Argentina and US sanctions have only added to their woes. Amid growing inflation and trade sanctions Iran decided to utilize its surplus electricity production for Bitcoin mining and went on to regulate the market. It was also considering using Bitcoin for foreign trades at one point. Iran recently temporarily banned all crypto mining in the country due to power shortages and blackouts. The president blamed illegal mining in the country for the electricity shortage.
While Argentina is a net importer of gas the household electricity bill accounts for only 2%-3% of total cost because of subsidized policy. Household mining could see a surge in the wake of worsening financial conditions.
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