Bitcoin miners in Argentina are using the economic policy of the authorities to extract significant profits, Bloomberg reports. The residents of the country turned the ultra-low prices for electricity and control over the movement of funds into an advantage.

As noted by Bloomberg, Argentineans have long resorted to cryptocurrencies to bail out the country's cyclical economic crises, including several devaluations, defaults, hyperinflation and now a three-year recession, exacerbated by the coronavirus. In addition to cheap electricity, an important factor has been the return of capital controls, which makes Argentinians unable to invest freely in foreign currencies and are even more motivated to mine digital. According to the unofficial exchange rate, the cost of bitcoin in Argentina is 5.9 million pesos, while according to the official exchange rate, it is 3.4 million.

Thanks to subsidies, electricity costs account for 2-3% of the average monthly income of Argentines. In neighboring countries, including Brazil, Colombia and Peru, this ratio is twice as high. Inflation annually takes away about half of the country's savings, and legally they can purchase only $ 200 per month. In the informal markets, there is a significant demand for any means of accumulation, and the peso is traded there 70% below the bank rate.

Mining firms are also taking advantage of this opportunity. In April, Canada's Bitfarms announced an agreement to directly connect to a local power plant for 210 MW, and now intends to create the largest Bitcoin mining facility in South America. Government subsidies do not fully cover the costs of corporate consumers, but the rate of $ 0.022 per kWh is still very attractive.

It is expected that, regardless of Bitcoin's behavior in the coming months, mining in Argentina will remain profitable as long as the authorities at least partially pay for electricity instead of their citizens.