Argentina’s crypto frenzy puts the energy grid of a small province in Patagonia near breaking point as miners take advantage of generous electricity subsidies to mint Bitcoin.
Crypto mining is expected to consume almost a quarter of the electricity supply in Tierra del Fuego province, which includes the world’s southernmost city, Ushuaia, over the next few months to October, according to a report. report from Argentinian electricity wholesaler Cammesa.
Local officials are warning that crypto mining, coupled with an already weak energy infrastructure, puts their energy grid at risk of collapse. The province’s energy secretary, Moisés Solórza, told the Argentine newspaper Clarin that the main cities of the province, including the capital Ushuaia, “are at their limit”.
Argentina is among the top 10 countries in the world with the highest adoption of cryptocurrencies, according to the specialized site Chainalysis. Shaken by recurring currency crises and inflation above 50% a year, two-thirds of Argentines who invest in crypto say they do so to protect their savings from declining purchasing power, according to research by Wunderman Thompson, based in Buenos Aires.
Crypto-mining firms had flocked to Tierra del Fuego, located closer to Antarctica than the country’s capital, Buenos Aires, to take advantage of cheap energy costs and a generally red tape-free regulatory environment for mining. ‘industry. They also take advantage of low temperatures which help cool crypto mining equipment.
Argentina’s government has been subsidizing energy consumption for years, at a cost of nearly $11 billion in 2021 alone, as part of a political strategy to garner popular support. Yet the mounting cost to the country’s fiscal situation led President Alberto Fernández’s administration to agree to cut subsidies as part of Argentina’s $44 billion deal with the International Monetary Fund.
The IMF agreement, signed last month, also calls on the government to “discourage the use of cryptocurrencies with a view to preventing money laundering, informality and disintermediation”.
by Patrick Gillespie & Ignacio Olivera Doll, Bloomberg