The Argentine government has eliminated energy subsidies for cryptocurrency miners.
Argentina’s Secretary of Energy eliminated energy subsidies for cryptocurrency miners, raising the cost of energy to almost 4 times what miners paid before. The measure affects customers of the energy market in the province of Tierra del Fuego, in the south of the country, one of the most used by mining in the nation due to its specific climatic characteristics, including the cold environment.
According to the new resolution 40/2022, published and made official on February 1, the new price of energy for the miners of Ushuaia and Río Grande will be 5,000 ARS (or USD $47.50) per MW/H. Before this resolution was published, these same miners paid around 1,764 ARS (or $16.76) per MW/h.
The reason behind the change is explained in the resolution, which states that due to the availability of payment and the profitability of the activity, it is considered appropriate that these users pay the price of energy equivalent to the cost of supply, being inequitable that they pay the price of a residential user or another.
Specifically, it further states:
The electrical energy consumption of the cryptocurrency mining activity presents a consumption profile characterized by its intensity and constancy, both hourly and seasonal, whose irruption presents challenges to the infrastructure of the concession area to which they are connected.
The resolution specifically affects miners located in the province of Tierra del Fuego, where the majority of miners in Argentina are located due to the cold climate that allows the establishment of mining farms without intensive cooling capabilities.
The Undersecretary of Electric Power also states in the resolution that it sent CAMMESA, the electric company, a note “Requesting information regarding the new consumption linked to the cryptocurrency mining activity that allows an evaluation of the current and future demand of this new economic activity.”
This is the article of the resolution that specifically talks about how electricity prices for mining will be calculated:
“ARTICLE 4.- It is established, during the period between February 1 and April 30, 2022, for the demand for electricity from users whose activity falls within the mining of cryptocurrencies for the WHOLESALE ELECTRICITY MARKET OF THE EARTH SYSTEM FUEGO (MEMSTDF), the application of the Reference Prices of Power (POTREF) and the Stabilized Price of Energy (PEE) in the MEMSTDF, which are detailed in Annex II (IF-2022-07849279-APN-DNRYDSE# MEC) that forms an integral part of this measure.”
Challenge for electric company
cammesa, Argentina’s energy wholesale company faces a challenge in trying to identify which sources are using the supplied energy for cryptocurrency mining purposes. During investigations last year, the company managed to identify two cryptocurrency mining facilities in the area. Regarding this finding, a source familiar with the matter told the newspaper The nation:
Monitoring is being done at the national level. These are the first ones we detected with relevant potency. Those that use a home connection are much smaller and very difficult to identify.
The media say that there is no official data on the subject, but without a doubt, more and more people and companies are mining cryptocurrencies due to the low cost of energy, which is subsidized by approximately 70% by the state.
It is worth noting that in November 2021 we reported that the mining giant Bitfarms, based in Canada, revealed the construction of a mining mega-farm in Argentina in the province of Córdoba, in the center of that country, in association with a private power plant. Bitfarms will buy the power directly from this private electricity company, supposedly without causing stress to the country’s electricity grid, so it would not be affected by the current measure.
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