Bitfarms Expands into Argentina with Cheap Power Deal and Massive Mining Plans

Bitfarms, a major Canadian Bitcoin mining company, has announced a strategic expansion into Argentina—securing an eight-year contract for 210 MW of electricity at $0.022/kWh. The firm expects to begin Bitcoin mining in the South American facility in early 2022, reducing operating costs and extending the lifespan of older mining equipment. This move comes on the heels of Bitfarms’ recent hardware investments and underscores the evolving trends in global Bitcoin mining as companies seek cost-effective energy solutions.

In this article, we’ll detail the major developments behind Bitfarms’ Argentina deal, how it could lower Bitcoin production costs by nearly 45% compared to its Canadian operations, and why it matters for the broader Bitcoin mining industry.

1. Bitfarms’ Argentinian Expansion: Key Details

1.1 Securing 210 MW at $0.022/kWh

In an April 19 announcement, Bitfarms disclosed that it had finalized an eight-year power contract in Argentina for a total capacity of 210 megawatts. At a rate of $0.022 per kWh, this arrangement significantly undercuts typical electricity costs in many other regions, including Canada.

Originally, Bitfarms signed a non-binding memorandum in October 2020 for 60 MW. The final agreement now offers 250% more capacity, although electricity rates saw a modest 10% rise from the previous terms. Still, the extremely competitive power cost positions Bitfarms to realize substantial savings.

1.2 Facility Construction & Timeline

Bitfarms is negotiating with a local construction and engineering firm to build a mining facility near the partnering power plant. The company projects it will:

• Begin construction: In the near term, once local partnerships and logistics are set.
• Start mining: Early 2022, leveraging new and existing hardware for full-scale Bitcoin production.

By situating the operation close to the power source, Bitfarms aims to optimize power delivery, reduce transmission costs, and improve overall mining uptime.

2. Bitfarms’ Vertically Integrated Operations

Established in 2017, Bitfarms touts a “vertically integrated” Bitcoin mining model. The company manages:

• Onsite technical repair to maintain hardware performance.
• Proprietary data analytics for real-time monitoring of mining efficiency.
• In-house electrical engineering to streamline setup and minimize downtime.

These capabilities enable Bitfarms to quickly deploy new mining sites and adapt older equipment in an evolving market.

3. Hardware Acquisitions and Cost Advantages

3.1 48,000 New-Gen Miners from MicroBT

Earlier in March, Bitfarms announced purchasing 48,000 new-generation Bitcoin miners from MicroBT. A portion of these new machines will populate the upcoming Argentinian facility, allowing for:

• Boosted Hash Power: Modern miners are more efficient, producing higher hash rates while consuming less energy.
• Reduced Production Costs: Combined with cheap Argentinian electricity, the new hardware optimizes the cost-per-BTC mined.

3.2 Older Mining Rigs Relocation

Beyond the brand-new machines, Bitfarms intends to transfer older mining equipment to the Argentinian site. The main driver is cheaper electricity, which extends the economic life of older rigs that might otherwise be unprofitable under higher energy costs in Canada. By effectively relocating hardware, Bitfarms lowers overhead and maximizes ROI.

4. Lowering the Cost per Bitcoin

4.1 From $7,500 to $4,125 per BTC

Bitfarms estimates it can mine Bitcoin at roughly $4,125 per coin in Argentina, down from $7,500 at its Quebec facility—over a 45% reduction in production costs. This substantial difference suggests:

1. Higher Profit Margins: The cheaper electricity significantly boosts Bitfarms’ bottom line if BTC prices remain strong.
2. Competitive Edge: Against rival miners who operate in higher-cost regions, Bitfarms can maintain profitability even if Bitcoin experiences price dips.

4.2 Hedge Against the 2024 Halving

In remarks about the Argentinian operation, Bitfarms noted the move also acts as a geographic hedge and halving hedge. The Bitcoin halving event, expected in 2024, cuts block rewards in half, impacting miners’ revenues. Having drastically reduced electricity costs can offset the blow from halved rewards, ensuring older equipment remains viable and profitable.

5. Broader Implications for the Mining Sector

5.1 Rise of Low-Cost Locations

With energy making up a large portion of mining expenses, more firms may migrate to regions that offer abundant, cheap power sources. Historically, places like China’s Sichuan or Canada’s hydro-rich provinces have been popular. Now, Latin America stands out as new frontiers, evidenced by Bitfarms’ leap to Argentina.

5.2 Mining Diversification

Splitting mining activities across multiple continents can mitigate risk from local regulation, natural disasters, or energy price changes. This trend promotes:

• Decentralized Bitcoin network: More miners distributing hash power globally, improving resilience.
• Local Economic Opportunities: Hosting mining operations can spur technology jobs and infrastructure development.

6. Recent Growth and Future Plans

6.1 Projected Hash Rate Increase

Bitfarms indicates it expects a significant hash rate spike. In April through July 2021, the company planned to deploy 3,496 new miners, potentially boosting its operational hash rate to 280 pentahashes per second (PH/s). More expansions in Argentina could propel that figure higher still.

6.2 Building BTC Reserves

Bitfarms is using part of its daily mining yield to steadily build a Bitcoin reserve—claiming to add up to 7.5 BTC daily. They foresee holding over 1,000 BTC in the next seven weeks, a strategy that positions the firm to benefit from any further BTC price appreciation.

Conclusion

By securing an eight-year deal for 210 MW of electricity at $0.022/kWh in Argentina, Bitfarms continues expanding its footprint beyond its Canadian base. This move underscores a larger Bitcoin mining trend: driving down electricity costs and diversifying operations globally to remain profitable in the face of potential regulatory changes and halving cycles. For Bitfarms, the Argentinian pivot could slash Bitcoin production costs by roughly 45% compared to its Quebec site, enabling even older machines to remain competitive.

As the mining arms race intensifies—reflected by major hardware purchases, geographic expansion, and an eye on upcoming halvings—Bitfarms’ approach highlights the importance of cheap, reliable, and scalable energy sources. Observers will be watching for similar expansions from other mining firms, potentially accelerating the shift of hash power to new corners of the globe.

To learn more about the innovative startups shaping the future of the crypto industry, explore our article on latest news, where we delve into the most promising ventures and their potential to disrupt traditional industries.