“It depends on”: the phrase that defines the profitability of Bitcoin mining in El Salvador

"It depends on": the phrase that defines the profitability of Bitcoin mining in El Salvador

Key facts:
  • Mining altcoins is more profitable, even if you pay for the cheapest energy in the country.

  • CriptoNoticias spoke with two miners with operations based in El Salvador.

The fact that it is the first country in the world to adopt Bitcoin (BTC) as legal tender does not necessarily mean that El Salvador is a place where the generation of this asset is profitable. In fact, it is advisable to mine Bitcoin ensuring energy self-sufficiency, otherwise it will be difficult to obtain considerable profits.

Average costs of USD 0.19 for each kWh (in the case of the service for business), a notable dependence on an international electrical network and the characteristic volatility of the first cryptocurrency, form the perfect cocktail for the exercise of Bitcoin mining no presence in this country. Many investors are cautious and they have even turned off their equipment when red candles abound in the market.

As part of our series on the profitability of Bitcoin mining in Latin America, CriptoNoticias turned the tide and spoke with a couple of miners with operations based in El Salvador. One of them is Abiezer Ventura. He is dedicated to mining Bitcoin, Ethereum (ETH), Ergo (ERG), Monero (XMR), Flux (FLUX), Conflux (CFX) and Alephium (ALPH).

Ventura maintains that the profitability of mining Bitcoin in El Salvador depends on whether the operator has the capacity to generate its own electrical energy. It is your case, his mining farms are powered by the energy he produces himself. It is based on self-support.

This is possible through the use of renewable energies, such as solar, which is obtained with panels. After the necessary process, and thanks to the star, electricity can be obtained, which is the raw material for cryptocurrency mining, the process of validating transactions from a network and then adding them to the blockchain.

“If one in El Salvador pays for energy, it is not profitable,” said the miner in an interview with CriptoNoticias. “The only way to be profitable to mine Bitcoin is to have a self-sustaining source of energy, a source of your own,” he asserted.

“It’s part of the investment. Anyone who wants to mine in El Salvador has to think about it », he suggested.

"It depends on": the phrase that defines the profitability of Bitcoin mining in El Salvador
Bitcoin mining is not that popular in El Salvador, even though it is a country where cryptocurrency is legal tender. / Source: DW – Youtube.

Alejandro Gutiérrez, another Salvadoran miner consulted by CriptoNoticias, defends that The profitability of Bitcoin mining in El Salvador depends, mostly, on the price of bitcoin. But he admits that energy costs also play a role.

He claims that when BTC is up, it is more profitable to mine. But when this is not the case, there are times when equipment must be turned off, because the price drops, plus the cost of the energy service, could generate losses and red numbers for any investor.

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"It depends on": the phrase that defines the profitability of Bitcoin mining in El Salvador

In addition, he argues that this country, per se, is not profitable for Bitcoin mining “because we do not depend on ourselves for electricity generation.”

And it is so. In El Salvador, although there are many private companies dedicated to the distribution and commercialization of energy, a large part of the population is electrically supplied by an international network, which is the Electrical Interconnection System of the Central American Countries (SIEPAC).

In the case of El Salvador, the state-owned company Comisión Ejecutiva Hidroeléctrica del Río Lempa (CEL), as well as the transmission company ETESAL, are shareholders of that System. So, Much of the energy reaches homes through the Salvadoran government. Although it sounds positive, the miner warns that a failure at any point in that network would affect operations.

Regarding energy costs, it must be said that they are considerable. As he told us, he must pay an average of USD 690 per month due to the size of his operations.

This is a significant cost, especially when compared to countries in the region. In Venezuela, for example, there are miners who must pay around USD 12 per month. In Argentina, meanwhile, there are those who have to pay up to USD 24 per MW and in Paraguay about USD 0.03 is paid for each kWh.

Find out if it is profitable to mine Bitcoin in Venezuela in this CriptoNoticias article

In Gutiérrez’s opinion, mining will be profitable in the future, when El Salvador begins to implement the widespread use of renewable energies, such as geothermal energy, which coincidentally has great production in that country. As he says he, this would allow the energy independence of that nation.

When that happens and we no longer depend on an external power supply system, things will change little by little, because electricity costs will go down.

Alejandro Gutiérrez, Salvadoran cryptocurrency miner.

"It depends on": the phrase that defines the profitability of Bitcoin mining in El Salvador
It is more profitable to mine with GPU instead of ASIC in the country where Bitcoin is legal tender. / Source: Composition.

Mining other cryptocurrencies can be more profitable

If the mining operations target other cryptocurrencies and not just Bitcoin, may be profitable. Even paying for energy to the State or private companies, in the words of Ventura.

Perhaps other cryptocurrencies, such as ether, can be profitable if one pays for electricity as long as it does not cost more than USD 0.20 kWh. In the case of Bitcoin, there is no profit if you do not have your own energy source. It would be giving 60% of the profit for electricity cost and it would not make sense.

Abiezer Ventura, Salvadoran cryptocurrency miner.

Gutierrez seconded him. He reminds that in addition to BTC there are other cryptocurrencies that can give similar returns when mined. “If the price of the currency is quite high, it will not matter so much that energy is quite expensive,” he says, “because operating costs will be covered and there will be a profit moderately good to be able to accumulate”, he specified.

In any case, it is imperative that the budget and the capacity of mining power or hashrate that can be made available to the network be studied. This will allow you to calculate data and know the length of time that will pass before the return on investment (ROI). “You will see if it is profitable to mine Bitcoin and other cryptocurrencies,” he said.

How much is earned mining in El Salvador?

It is variable. Both specialists released close estimates. For Venture, up to USD 300 can be made per month, mining with a Bitmain Antminer S19 Pro rig (valued over USD 13,000), and paying electricity. On the other hand, if one appeals to self-support, as he does, the profit could be up to USD 700 per monthon average.

Gutiérrez, meanwhile, spoke of earnings of up to USD 1,000, although here you specify the size of the investment you want to make in machinery, spaces and everything that concerns Bitcoin mining.

For example, with about $50,000 invested to mine BTC, rewards of up to $3,000 could be earned within a monthaccording to Gutiérrez’s calculations.

If it’s Ethereum, up to $10,000 could be invested in all trades, to collect earnings of up to USD 700 per month. “It is quite fluid how much you can earn per month mining Bitcoin or other cryptocurrencies,” she argued.

"It depends on": the phrase that defines the profitability of Bitcoin mining in El Salvador
The Salvadoran government set up a Bitcoin mining farm with 300 ASICs next to the Berlin Geothermal Center. / Source: DW – Youtube.

Would you mine in Paraguay? See if it is profitable in this CriptoNoticias article

Geothermal energy, centralized by the government?

In El Salvador there have been Bitcoin mining activities from the electricity produced by geothermal energy. CriptoNoticias was at the plants last November and you can see the interviews we did in this Noti Hash.

However, it seems to be an activity that is centralized by the Salvadoran State. The Nayib Bukele government is the only one that has access to the geysers, located in the Berlin Geothermal Power Plant, on the slopes of the Tecapa volcano, with which energy can be produced.

La Geo is present there, a company attached to CEL dedicated to the production of electrical energy from the geothermal resources of that country. Geothermal energy uses the force of the water vapor that is expelled from the geysers to turn a turbine and generate electricity. Historically, El Salvador has used this process to advance energy self-sufficiency, hand in hand with this company.

With Bukele’s state policy, it was decided to install a Bitcoin mining farm inside the Berl Geothermal Power Plantinwhere some 300 ASICs are powered by geothermal energy.

But not everyone has access to the plant. If a conventional miner, apolitical and focused on his investment, wants to have his supply of that energy, he must first face the state bureaucracy to be granted a permit that can be revocable whenever the government decides. The other option is to have “good contacts” with the National Palace.

Abiezer Ventura maintains it this way:

Most of the geysers and places where geothermal energy emanates are occupied by the State and if they do not use them to produce energy, they have appropriated it. If you as a miner want to get to and use one of those places, it’s not like you can buy a geyser. You have to have a permit to use them and the government can withdraw it whenever it wants. Unless you have good relations with the government, it is not profitable, because there is no way to guarantee the investment.

Abiezer Ventura, Salvadoran cryptocurrency miner.

Gutiérrez, although he acknowledged that Bitcoin mining is taking place in the aforementioned center, said that We must wait for the years to pass and the projects of the Bukele government to materialize, such as Bitcoin City, where they want to extract geothermal energy from the Conchagua volcano. “There we will see if the activity is centralized or if it expands to other parts of the country,” he said.

"It depends on": the phrase that defines the profitability of Bitcoin mining in El Salvador
Berlin Geothermal Power Plant, seen from space. / Source: Google Maps.

In Argentina, mining Bitcoin has a varied profitability, discover why

There is a long way to go before mining becomes an industry in El Salvador

Mining has been expanding – at an ant’s pace – in El Salvador. One or another company is dedicated to the activity, complying with what we have already seen to guarantee profitability. Therefore, it is difficult to see an industrialization of the activity in the short term.

For Abiezer Ventura, mining is not a consecrated industry. He rather says that there is “a lot of ignorance and lack of transparency”, since the State has monopolized the activity (in the case of mining with geothermal energy). In addition, there is a lack of more education in people and, of course, a government subsidy for miners.

In the case of Gutiérrez it is not different. He agrees that there are miners in El Salvador, but it is an activity that not everyone does because it requires a fairly large investment, in addition to essential technical knowledge. “It’s an industry that needs a lot to grow,” he said.

For this reason, and for those who want to delve into mining Bitcoin and other cryptocurrencies in El Salvador, the advice of both specialists is study and find out about the ecosystem and then define the investment capacities, before taking the plunge into an activity that still has a lot to offer in this country.

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