At the end of 2021, versions began to circulate about the intention of the Argentine Government to charge more expensive the rate of electricity to large cryptocurrency mining farms.
Specifically, by order of the Undersecretariat of Electric Energy, the Administrator of the Wholesale Electricity Market (CAMMESA) asked electricity distributors across the country for information on the energy consumption of this activity.
It happens that to “create” cryptocurrencies and to validate transactions on the blockchain, a lot of computing power is needed. This is usually done with very powerful computers, specifically, with video cards (GPU) for its efficiency for these tasks.
In February of last year it was learned that the energy consumption demanded by the bitcoin network had exceeded the annual consumption of all of Argentina. However, the most mined cryptocurrency at the moment is Ethereum, due to the investment / return ratio: mining bitcoins is becoming more difficult and therefore more expensive.
The information first emerged on the website La Política Online, where it was explained that “the official intention is to know where the farms are,” to discourage these ventures “and require Large Users “investments in the system”.
In a context of high temperatures throughout the country, which always increases electricity consumption due to the intensive use of air conditioners, the Government has the intuition that the great popularity of cryptocurrency mining exacerbates the problem.
Many users mine on their own, under the “lone wolf” mode. This type of domestic activity would not be reached by the potential new regulation, which tries to go after the big players that make a difference in electricity consumption.
In the Government they clarified that the higher cost of the tariffs would be in principle only for the category Large Distributor Users (GUDI) and Self-generators of the Wholesale Electricity Market (MEM).
How much does the bitcoin network consume
The bitcoin network uses the “proof of work” protocol. Photo Bloomberg
The last large report on the consumption of the bitcoin cryptocurrency network determined, in September of last year, that it corresponds to seven times the electricity that Google uses to keep all its global operations active.
That’s almost 0.5% of all electricity consumption worldwide, and a 10-fold increase from just five years ago.
It is true that measuring the energy use of the cryptocurrency network is complicated. But it is known that the protocol that bitcoin uses for its mining consumes a lot (Proof of Work), as opposed to the one that Ethereum wants to apply to reduce it (Proof of Stake).
As more transactions are made and more is mined, the equations that solve the operations become more complex. This is why a simple desktop PC could mine bitcoins without problems in 2011, when the crypto world was one of a few enthusiasts.
Now, it takes approximately “13 Years of Typical Household Electricity” to mine a single bitcoin, specialists say.