$63,126.58
-1.67%
$3,071.70
-0.11%
$77.09
-0.96%
$27.81
-5.25%
$120.99
+1.88%
$0.00
+13.9%
$26.01
+1.15%
$0.16
+4.28%
$20.95
-0.86%
$0.00
+2.08%

Why does the Government want to know how much electricity Argentine crypto miners consume


Home » Economy » Why does the Government want to know how much electricity Argentine crypto miners consume January 1, 2022 Malicious crypto mining. Photo: broadcast.

The increase in electricity rates for 2022 comes with flats. In addition to the “segmentation” by socioeconomic level that the Minister of Economy, Martin Guzman, intends to apply, already There are indications that the Government wants to discourage cryptocurrency “mining”, a highly profitable but also highly electricity-intensive activity.

On Monday, December 27, by instructions of the Undersecretary of Electric Power, Federico Basualdo, the general manager of Compañía Administradora del Mercado Mayorista Eléctrico SA, Sebastian Bonetto, began the process of “requesting, receiving and processing information corresponding to energy consumption carried out and planned for the mining of cryptocurrencies”, gathering information from “companies characterized as Large Users and Self-generators of the MEM (Electric Wholesale Market).

Sworn declaration

Bonetto’s note requests the sending “as an affidavit the information from your MEM Large User and Self-Generating establishments corresponding to the consumption of electrical energy made for mining cryptocurrencies in 2020 and 2021 and the consumption forecast for the years 2022 and 2023 for said activity ”.

In addition, it specifies that “the consumption value to be declared is that corresponding to the set of servers, cooling system and consumption associated with the mining activity” and that the affidavit must include the Unique Tax Identification Code (CUIT) and the corresponding Classifier of Economic Activities (CLAE) of each crypto miner, all of which must be reported in a maximum of 15 business days.

Why does the Government want to know how much electricity Argentine crypto miners consume

Cammesa’s note to Large Users, asking them to identify crypto miners

Cammesa is the mixed company that manages the wholesale electricity market and through which the bulk of the state subsidy is channeled to distributors. In 2021, according to various calculations, energy subsidies exceeded USD 10 billion, a figure that hardly goes unnoticed by IMF technicians who are negotiating the restructuring of Argentina’s debt with the agency.

GUDIS

Cammesa’s note is directed at what in electrical jargon they call GUDIs. “I suppose that Large Users and Auto Generators are registered in Cammesa with a lot of transparency, but I don’t know how they can implement that,” he said. Julian Red, technical director of the Argentine Institute of Energy (IAE) General Mosconi.

Spokesmen for the Energy area refrained from specifying whether the request points to an eventual partial or total withdrawal of subsidies for crypto mining. The truth is that it is an activity of high energy consumption: worldwide already in 2020 the mining of bitcoin (the most popular cryptocurrency, not the only one) exceeded the annual electricity consumption of countries such as Belgium and Argentina.

The restrictions on critical mining that China was imposing, where about two-thirds of global crypto was “mined”, forced miners to relocate activities.

The combo of devalued local currency, cheap electricity, 50% annual inflation and high exchange rate gap make Argentina an attractive country for mining cryptocurrencies, which in turn requires the purchase of mining equipment (in particular the so-called “rigs”, a term taken from the oil industry), with video cards with high processing capacity. Ergo, high power consumption.

Strange couple

Federico Basualdo, the undersecretary of Electric Power who instructed Cammesa to identify the critpomineros and measure their past and present consumption and ask them to report their future consumption plans, is the same one that Guzmán had commissioned the tariff “segmentation” to apply, already in 2021, tariff increases of two digits.

Why does the Government want to know how much electricity Argentine crypto miners consume

Minister Guzmán, Undersecretary Basualdo

Last April, Economía circulated that Basualdo had been incompetent in the task and that, with the consent of the then Chief of Cabinet, Santiago Cafiero, and the president himself Alberto FernandezGuzmán had fired him. But, with the support of the vice president Cristina KirchnerBasualdo, a third-level civil servant, resisted, continues in his position and imposed his opinion. The increase for the users of Edenor and Edesur (the distributors over which it has power) was 9%, not 15%, as Guzmán intended.

Now, again, the withdrawal of subsidies and the rate increase are at stake and the pull has resumed. According to the specialized portal Econojournal, Christianity came out to “install” that the increase in electricity and gas rates will be only 20% for 80% of users, something that would not have the endorsement of Guzmán, as it would force him to maintain a high volume of subsidies, even if the remaining 20% ​​receive increases that were estimated to be up to 400 percent.

Much will depend, in turn, on the cost of gas that Argentina imports in the winter months, when local production is not enough to supply both residential consumption and the use of gas for electricity generation.

The identification and registration of consumption by crypto mining would be a step in the “segmentation” that Guzmán requested and that Basualdo still owes. Cammesa’s note reveals that the state does not know, even approximately, how much energy is consumed by lone crypto miners or crypto mining “farms”.

What there is no doubt is that it is a profitable activity. And with risks. Last October there was the murder of Gonzalo Refi, by three criminals, in the Gerli area. Refi was dedicated to the sale of crypto mining equipment.

The high energy consumption is linked to the validation that crypto miners must do (Proof of Work, or Proof of Work)) for each unit that “mints”. The energy for validation grows as the number of operations and crypto units increases through “blockchains” (blockchain), which requires a very high computer processing capacity.

Why does the Government want to know how much electricity Argentine crypto miners consume

A “crypto mining” farm: a lot of money and energy at stake

Both Bitcoin and Ether, the second highest value by capitalization, have that problem. The Russian-Canadian was recently visiting Argentina Vitalik Buterin, creator of Ethereum (the open system by which Ether was created) that tries to solve this problem, which makes the operation more expensive and casts shadows on the future of his creature. Buterin seeks that the validation is done through a simpler system, of Proof of Stake, or Proof of stake, to reduce energy consumption and make transactions cheaper.

Buterin himself confessed that the development that he had liked the most of the Argentine crypto ecosystem was the Proof of Humanity, or Test of Humanity, developed by its host, Santiago Siri, for your Universal Basic Income (UBI) project.

Beyond the challenge of the Russian-Canadian crypto demise, Guzmán and Basualdo’s common interest is that the crypto miners do not make a firm base in an Argentina that each summer leaves tens of thousands of users without electricity service whose votes do not want to be alienated, demanding that they pay a rate more or less approximate to what it costs to generate energy.

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