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A Crypto-Revolution in Argentina

By Agustino Fontevecchia

June 20, 2020 



Argentina’s economy is prime breeding ground for the crypto-world. And the populist promise of cheap energy here is a crypto-miner’s dream.

While Alberto Fernández hogged the spotlight this week with his racist gaffe, a digital auction held by Sotheby’s netted US$17.1 million selling digital art, including a CryptoPunk known as “Covid Alien” that went for US$11.75 million. Indeed, a new report indicated that Argentina ranked 21st in the world in realised bitcoin gains last year, with some US$200 million. And, as Economy Minister Martín Guzmán dukes it out with Buenos Aires Province Governor Axel Kicillof and Vice-President Cristina Fernández de Kirchner over energy subsidies in an electoral year, they’ve helped feed a boom in crypto-mining given dirt cheap residential electricity costs.

Despite the extreme volatility in the cryptocurrency market that saw bitcoin’s price surge 550 percent to a record above US$60,000 in a matter of a few months, only to come crashing down below US$35,000 just 13 days later, there’s a crypto-boom going on across the globe. Argentina’s economy is prime breeding ground for the crypto-world. Stuck in a decades-long economic downturn with its consistent gusts of stagflation, administrations of all colours have relied on price freezes and currency controls to try to put a lid on inflation. Yet, the destruction of purchasing power continues unabated, leading many to try and find their way into US dollars paying a massive premium for the so-called “dólar blue,” currently at 58 percent. According to a report by economic daily El Economista, Argentines hold some US$130 billion within the financial system — estimated to represent about eight percent of the actual physical stock of dollars in the world — and another US$175 billion “under the mattress,” as we like to say. Cryptocurrencies are already being used to convert pesos into dollars circumventing government restrictions through peer-to-peer transactions at more competitive exchange rates than the aforementioned blue-chip dollar, with said transactions rising from under US$200,000 in late 2019 to US$600,000 last year, according to data from ChainAnalysis.

In the heat of an electoral campaign, the ruling Frente de Todos coalition is having an internal power struggle regarding the election of an economic plan. Guzmán sought to reduce the fiscal deficit, even in the midst of an explosive recession exacerbated by the latest bout of Covid-19 infections and deaths. Guzmán is in Fernández de Kirchner’s crosshairs – she believes ex-president Mauricio Macri lost the elections by hiking public service bills during a recession. The populist promise of cheap energy has become a crypto-miner’s dream.

Bitfarms is a publicly traded bitcoin mining company that announced it was ramping up its operations in Argentina from 60 megawatts to 210, “sufficient to support approximately 55,000 new-generation miners, which could generate approximately US$650 million in revenue.” In the same statement, Bitfarms indicated the breakeven cost of mining a bitcoin in Quebec, Canada — where they have operations — stood at US$7,500 in the fourth quarter of 2020, compared with an estimated US$4,125 in Argentina, if their facility was up and running at the time. Electricity makes up about 75 percent of mining costs, which helps to explain the math behind paying for subsidised energy in pesos, only to turn around and offload bitcoins and ether — the second-largest cryptocurrency — at a premium over the official dollar exchange rate. Argentina has over 20 crypto-farms already, with several taking advantage of cold weather in Patagonia to lower cooling costs.

Buenos Aires Times | A crypto-revolution in Argentina (


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