The Bitcoin mining company Bitfarms, one of the largest companies in the industry, has announced that it will be expanding its South American operations by launching its biggest operation yet.
In a statement published by the company on April 19th, the company updated the community on the status of the project originally announced on October 26th of 2020, in which the company said it had signed a non-binding memorandum to secure electricity at approximately US$0.02 per kWh in Argentina.
The objective of that memorandum was to pursue the development of a 60 MW Bitcoin mining facility, which after 6-months of contractual work resulted in an agreement with an eight years term.
The project will draw up to 210 MW of electricity and won’t require expensive liquid immersion colling due to the climate conditions in the Latin American country, which is especially favorable for mining activities when compared to those of Quebec, where Bitfarms is based.
According to the statement, the new Argentina facility is expected to operate with savings of up to 45% when compared to the costs of Bitfarms’s Quebec facility during the fourth quarter of 2020, a considerable percentage for an operation of that size.
2022 is Magic for Bitfarms
While the new agreement has yet to be signed, the company is currently in advanced contractual discussions with a construction company that specializes in the construction of utility-grade electrical infrastructure.
The new data center requires the design and construction of electrical interconnection, high-voltage electrical lines, and transformers.
Bitfarms is aiming at having the new facility live and operating in early 2022, a year in which it is expected that it will significantly contribute to Bitfarms 8-0 EH/s target by the end of 2020, while also hedging for the company in preparation for the next halving event in 2024.
The agreed 210 MW will support about 55000 new-generation mining rigs which could generate over 11700 BTC, the equivalent of $650 million at a price of $55k, with “a substantial part” of a recent order of 48k MicroBT destined to arrive at the new facility.
The company also said that a big part of its older mining rigs will be moved to the new data center as despite being less efficient than new miners, the lower energy costs will extend their economic life and in consequence, raise the operations overall corporate hash rate.
With Bitcoin mining being highly energy-intensive, the Argentinan expansion will not only allow Bitfarms to save 45% in energy costs but also to provide geographic production diversification that will reduce the risks associated with such an operation.
Argentinians Are Falling in Love With Crypto
Argentina has been one of the strongest economies in Latin America for most of recent history despite the high levels of political and economical instability that have characterized it in international markets, forcing the country to require the help of the World Bank on several occasions.
Over the last decade, the country has experienced different levels of exchange controls that have prevented its residents from acquiring foreign currency to hedge against the increasing inflation the country experienced in recent years, creating a black market in which people pay unofficial rates known as “Blue dollar”.
With the rise of Alberto Fernandez to the presidency, the economic controls tightened and several taxes were added to any payment in dollars, digital services for foreign companies, and imports.
These added restrictions boosted the popularity of cryptocurrencies in the country, with companies like Ripio, a local crypto exchange, more than duplicating their userbase during 2020.
Juan Mendez, Chief Brand Officer at Ripio, referred to Argentinan economic situation in an interview with Coindesk in 2020 by stating:
“Argentina has had to overcome a lot of economic disasters over the years. We’re pretty much used to governments and strategic economic planning failing, and we are more willing to try different things in order to keep the country afloat.”
This belief is reflective of Argentinan residents who have multiple experienced periods of high inflation, defaults, and political instability in the past, even resorting to traveling to neighboring countries to acquire dollars and now, harvesting the power of cryptocurrency to fight against the currency controls.