Mining cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) is an activity with marked differences in Argentina. The situation is very different for those who work at the industrial level and those who do it from their homes. In the end, while it is true that the industry is sustaining itself and growing, profitability is very relative.
To answer a question about whether cryptocurrency mining is a profitable business in Argentina, CriptoNoticias contacted two miners. One of these runs a business and the other is dedicated to the activity using an Ethereum miner from their home.
Paulino Rossi is the President of Southmining Capital, a company dedicated to mining Bitcoin and Ethereum, located in the exclusion zone of Tierra del Fuego, an island off the American continent, but belonging to the Argentine Republic. He told CriptoNoticias that there are “many energy resources” that can be used in projects related to digital mining.
Argentina is profitable due to the combination of cold regions, which allows to reduce the costs of cooling infrastructure. In addition to having very competitive power generation costs around the world.
Paulino Rossi, President of Southmining Capital.
Rossi asserts that the fact that they are in that isolated area gives them the possibility to evaluate other investment projects to benefit from the energy that has a fossil origin in that place: natural gas.
The specialist explains that mining in cold weather, the divided local economy and governed by two types of changes, and the cost of electricity, They mean that miners in that country have twice the profit of other countries.
In fact, despite all the opportunities, he categorically ruled out that his company, Southmining Capital, would expand to other Latin American countries, such as Venezuela or Paraguay, where the business is also developing.
“The competitive advantages that we have in Argentina are not visible in other Latin American countries,” he emphasized, adding that they seek to innovate and analyze other resources, such as wind or hydropower, To continue mining cryptocurrency.
But Rossi contrasts Andrew Cartaya*, an Ethereum miner who works from his home in Buenos Aires. It is sourced from the national power grid and has been processing the second largest blockchain by valuation for several months. for this mine, Argentina is not profitable; Or maybe yes, but very little.
In comments to CriptoNoticias, he denied that Argentina has enough infrastructure to boost cryptocurrency mining. “At the level of domestic consumption, within cities, power stations are suitable for local consumption, so it is rare to find miners within cities,” he said.
The story is different in industrial centres, where there can certainly be mining farms. “But at the country level, there is no system of excess energy, which strongly discourages activities associated with electricity consumption such as mining,” he added.
in Argentina, Household electricity consumption is up to 300 kWh per month. The number varies depending on factors, such as environmental factors, the size of the home, the number of people living in it, and the number of electronic devices used, among others.
During times of peak consumption, there are frequent supply cuts that reduce profitability, delay recovery of investment and lead to equipment failures, which are also very difficult and expensive to achieve due to the high inefficiency of Argentine customs.
Andrew Cartaya, Argentine cryptocurrency miner.
Very low profitability of cryptocurrency mining
Cartaya insisted that the profitability of cryptocurrency mining in his country is very low, “and everything indicates that it will be more and more.” this is, Despite the fact that mining equipment is becoming more efficient. “Argentina lives a different reality from the rest of the region, offering an unattractive mix for miners,” he said.
He described the problems that, in his view, threaten the activity. One of them is the difficulty of importing, as well as power failures. Tax rates are another determining factor and the other is the legislation Which, he says, has a “blackmail and persecution” tinge.
These problems mean that miners currently do not see Argentina as an attractive place to settle and, in many cases, are already moving their facilities to other countries in the region. In neighboring countries, they take advantage of this phenomenon because, by approaching the miner as an investor, they benefit from the entry of cryptocurrencies into their country, as well as attracting other capital.
Andrew Cartaya, Argentine cryptocurrency miner.
For Cartaya, Argentina cannot be considered a profitable bitcoin mining country Rather, “is one of the high-risk countries” to do this activity.
Cryptocurrency mining is on the rise
For at least two years, cryptocurrency mining has gained prominence in Argentina. This was demonstrated in 2021, when one of the largest companies in the field, Bitfarms, announced an investment of $250 million to install a Bitcoin mining farm in Cordoba.
From there, significant movement around the activity was seen. Miners have taken Tierra del Fuego as a new destination to exploit cryptocurrency miningwhere operators pay small sums for the energy they consume.
This is what Paulino Rossi suggested. He points out that Tierra de Fuego lies outside Argentina’s interconnected electricity grid. That is why he says: “We are isolated from the national problem.”
However, it was known, according to CriptoNoticias, that the Argentine government blamed crypto miners for the electricity crisis that the country has been experiencing in recent days. The management company for the wholesale electricity market Sociedad Anónima (CAMMESA) has asked large consumers to provide detailed information on their activities related to the processing of blockchain networks.
Subsequently, it was reported that the Argentine government had eliminated electricity subsidies for crypto miners, specifically, in the province of Tierra del Fuego, arguing that the intensity and consistency of electricity consumption by miners “present challenges to the infrastructure of the area to which they connect. However, they imposed Tariffs They considered it appropriate for miners to pay for energy at a cost equivalent to supply.
For a Russian, that tariff did not have much effect. Even with the energy costs, he argues, Argentina is a dangerously competitive country on a global scale, and moreover, it is effective at mining cryptocurrency. So much so that he anticipates large-scale mining investments in the medium-term future.
In contrast, Cartaya sees these investments amounting to a “utopian scenario”. Previously, he says, an attractive environment must be created for miners to carry out the activity. “But it is a very remote circumstance because miners do not have excess capacity and do not trust the government,” he said.
mining equipment supply problems
Andrew Cartaya spoke about the supply chain problems of equipment for mining bitcoin and other cryptocurrencies. He asserts that import barriers, excessive taxes, customs delays, and fear of potential federal agency impositions “make local miners not see Argentina as an attractive destination.”
“There are also global complications, such as a lack of chips, but this will be a problem for miners anywhere in the world,” he added, concurring with Paolino Rossi, who highlights that failures in the supply of inputs are global in nature. “Because it depends a lot on the levels of demand from China.”
Cartaya sees it as unlikely that Bitcoin and other cryptocurrency mining will be incorporated as an industry in Argentina, because investors, when conducting risk and strength analyzes in the case of Argentina, “sounded all the alarms.” This is because they face underinvestment, lack of infrastructure, legal and asset insecurity, and political uncertainty, all of which can quickly put investments at risk.
However, it’s not all bad news. Cartaya cites analysts who are confident that the situation will improve in the coming years, Something that goes hand in hand with global conditions Which, as we have seen, is subject to change. Plus, he notes, it’s a “few years of life” industry that can certainly expand, but given the right conditions.
“With the arrival of better and more stable legal frameworks, and future technologies, there may be a change in the favorable conditions that will generate new opportunities in Argentina and around the world,” the specialist concluded.
*Andrew Cartaya is the fictitious name of an Argentine miner who told CriptoNoticias and who did not wish to be identified for fear of reprisals.