These are the best Latin American countries to mine Bitcoin today
The mining landscape keeps rearranging after new regulations take shape in different countries. In that scenario, Latin America rises as a desirable destination for large-scale mining facilities. Here are the most favorable countries for cryptocurrency mining in the region.
What makes a location attractive for crypto mining?
Cryptocurrency mining is a location-agnostic activity. Miners can settle down anywhere in the world and put their hardware to work as long as they have two things: a reliable internet connection and a stable electricity supply.
However, you often see enterprise-level mining organizations setting up enormous facilities in the same specific locations.
Before, it was China, but after the ban, the panorama changed. North America seems to be gaining the upper hand in becoming the home of most crypto miners worldwide.
But why does this happen? Why do these corporations always coincide in the same places?
Three major factors define if a specific location is suitable for crypto mining:
- Cheap, accessible energy: It’s no secret that mining is energy-intensive. The electricity bill will be the most significant expenditure of a mining operation. That’s why any country or city offering low-cost and reliable power will always be more attractive for miners looking to lower their costs.
- Friendly government regulations: As crypto becomes more and more popular, the legal framework around it keeps developing. Some governments take a friendlier approach, defining clear rules to make crypto assets legal or even legal tender. Others, not so much, sometimes banning it altogether. Of course, countries with a welcoming stance on crypto facilitate crypto mining.
- Proper infrastructure: Last but not least, mining facilities need adequate infrastructure to maximize performance and reduce expenses. Factors like rack space availability, reliable and stable power grids, and steady internet connections are only a couple of examples of how infrastructure can boost mining output.
As we said, the United States and Canada check all three aspects, which is why they are absorbing most of China’s migrating hashrate.
Nonetheless, as the landscape keeps evolving and crypto adoption spreads to emerging economies, a new region is starting to emerge as another attractive alternative for crypto mining: Latin America.
Latin America: The new haven for crypto miners?
Many Latin American economies have several factors in common: Low living costs compared to North America and Europe, abundant natural resources — including power sources, like oil and natural gas — , and high inflation and progressive devaluation of national currencies against the dollar, mainly due to increased public spending.
At the same time, and because of unstable financial situations, cryptocurrencies are most useful for these countries’ populations. Crypto assets provide Latin American people with a hedge against inflation, avoiding high remittance and payment services fees and enabling easier access to financial instruments and services for the unbanked.
That said, a few countries run ahead as the best crypto mining destinations in the region for one reason or the other.
The best Latin American countries to mine crypto
As we mentioned above, the following are all very similar cases. Countries with low electricity bills added to a weak local currency to pay them make crypto mining exponentially profitable.
Additionally, the abundance of natural, energetic resources lays the ground for industrial development and maximum efficiency, all thanks to proof-of-work. Here are the best cases:
Venezuela
It is a well-known fact that Venezuela is one of the most troubled economies in the world. Struck by almost 3,000% inflation and in constant recession, cryptocurrency mining in Venezuela provides a unique opportunity for large and small-scale miners alike.
The country is also home to the largest oil reserves worldwide, which, added to the government’s subsidy on energy, makes electricity prices per kilowatt in Venezuela the lowest in the globe.
Electricity waste is also a world record, which provides an enormous win-win opportunity for cooperation between miners and oil producers.
There is a downside, though. Crypto mining in Venezuela is legal, but it demands extensive bureaucratic procedures and paperwork.
Retail miners tend to go around these requirements, resulting in many arrests and hardware seizing.
Argentina
Argentina is an extraordinary case. Economy Nobel Prize Simon Kuznets once said that “there are four kinds of countries: developed countries, underdeveloped countries, Japan, and Argentina.”
For decades, the country has been a prey of political disfunction and relies heavily on taxes and money printing to finance its aggressive welfare programs.
That led the Argentine peso to hastily lose value against foreign money, particularly the dollar (from 8:1 in 2015 to 185:1 in 2021). The market is ruled by an informal dual currency system, as citizens have already chosen the dollar as their preferred currency, even when it’s not legal tender.
The government restrained the purchase of foreign currency, trapping people with a devaluating currency. Since then, a black market for the dollar has emerged, shooting up its price and leading to six different quotations for the United States currency.
Cryptocurrency, however, is free to acquire. And it’s gaining immense popularity in the past few years due to government interference in the economy. Crypto is out of their reach, and more Argentines seem to realize that with each passing day.
Additionally, Argentina is rich in natural, energetic resources. Vaca Muerta, an under-exploited natural gas reservoir in the Patagonic region, is the second-largest in the world, and the north of the country is abundant in lithium.
Like in Venezuela, the abundance of natural resources added to government subsidies leads to cheap electricity prices. These, although not as low, are still three times cheaper than in the US.
Cryptocurrency mining would enable Argentines to gain a steady income and hedge against a failing currency. It would also provide the country with the necessary incentive to develop the energy industry and exploit its ever-idle natural resources while generating wealth simultaneously.
The catch is that it’s likely that the Argentine government will impose taxes on miners sooner or later — as it has in other sectors of the market — adding crypto to the extensive list of heavily strained industries that pay them the funds they need to finance their policies.
El Salvador
Perhaps the most expected item on the list. It’s impossible not to add El Salvador as a favorable destination for crypto mining after the euphoria of Bitcoin becoming legal tender.
Not only can you pay with BTC wherever in the country, but the government is incentivizing people to do so.
Besides developing its own national dual currency wallet, Chivo, El Salvador has deployed over two hundred Bitcoin ATMs, and fifty “Puntos Chivo,” which are customer service stands to assist the population.
Regarding mining exclusively, President Nayib Bukele began constructing large-scale mining facilities that will use geothermal energy from the region’s volcanoes.
Additionally, he announced several advantages to attract crypto investors to the country. Among the benefits for Bitcoin users, there is:
- Zero capital gains tax for Bitcoin profits.
- Immediate permanent residency for investors.
- Although it was already in force, the president insisted on zero property taxes.
- Infrastructure development to support the cryptocurrency industry.
- Personal meetings with interested investors.
If you want to learn more about Bitcoin becoming legal tender in El Salvador, read our article below.
Nevertheless, electricity is not as cheap and accessible as the previous two examples, and El Salvador — one of the continent’s smallest countries — doesn’t enjoy much space to host many enterprise-level mining facilities.
Time will tell if the government can effectively win the crypto industry over and convince them to settle within their territory. At least for now, they seem to be on the right path.
What to expect moving forward?
The crypto mining industry is still rearranging. Like the market, changes happen so fast and immediately that it is hard to predict what will happen accurately.
El Salvador’s success — or lack of it — will be critical for tipping the balance towards crypto adoption. Especially when other countries — Ukraine, Honduras, Laos, and Guatemala, to name a few — are allegedly considering going down the same road.
We can only hope that, like El Salvador, more countries will start to acknowledge cryptocurrency as the most efficient, democratic, and accessible financial system in the world. And with that, offering more benefits and advantages for crypto miners worldwide.
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