Argentina increases electricity tariffs for crypto miners, putting pressure on miners.

Argentina increases electricity tariffs for crypto miners, putting pressure on miners.

Argentina: Crypto Miners Face Higher Electricity Prices

Introduction

The blockchain industry has been making waves around the world, but recently, crypto miners in Argentina have faced a significant setback. The Ministry of Economy in Argentina has published a revised list of electricity rates that significantly impact crypto miners in the country. These new rates impose higher costs on miners, hindering their activities and potentially causing widespread disruption.

Revision of Electricity Rates

The Ministry of Economy has set a new rate of 17,240 Argentine pesos (around $63.30 at the time of writing) per megawatt-hour (MWh) for crypto miners, which is the highest band on the ministry’s scale. This places crypto mining in the same energy price bracket as heavy industries and above the levels paid by commercial enterprises. These revised rates came into effect on August 1 and will continue until October 31, 2023.

This rise in energy costs for miners is a result of the removal of subsidies on electricity prices. Residential energy costs in Argentina are heavily subsidized, with households enjoying subsidies of up to 70%. In contrast, the new rate puts crypto miners on par with heavy industries, making their operations much more expensive.

Impact on Crypto Miners

The increase in electricity prices has caused significant upheaval in the crypto mining community in Argentina. Miners have been struggling with spiraling energy costs for over a year, and the removal of subsidies earlier this year already led to a sharp price increase. The subsequent rise to over $63 per MWh may further hinder the activities of local miners.

The differentiated electricity rates for crypto miners are a relatively new phenomenon in Argentina. The Ministry of Economy’s decision to impose higher rates on miners reflects the challenges associated with the intensity and consistency of electricity consumption inherent in crypto mining.

Government’s Response and Monitoring Efforts

At the end of January 31, 2022, the Argentine government published an official definition of mining and announced a new mining policy. The government acknowledged that the emergence of crypto mining poses challenges to the infrastructure of the grids in which miners operate.

Power firms in Argentina have been actively monitoring crypto miners at a national level. They have successfully shut down large-scale illegal crypto mining farms but face difficulties in identifying smaller-scale “home connection” miners.

Increasing Crypto Awareness in Argentina

Argentina has seen a significant rise in crypto awareness, with recent studies indicating a 75% awareness level among its population. Against this backdrop, a leading lawmaker has even suggested that Argentina should consider adopting Bitcoin (BTC) instead of pursuing dollarization plans.

Conclusion

The crypto mining industry in Argentina is facing a challenging period due to the revision of electricity rates. These higher energy costs for miners can hinder their operations and have wider implications for the growth of blockchain technology in the country. As Argentina grapples with the impact of these changes, it will be interesting to observe how the government and crypto community navigate this new landscape.

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