A British company’s plan to build a large-scale crypto-mining farm in a free trade zone in Argentina’s Patagonia region is being met with resistance from environmentalists who say the project will consume up to four times the electricity currently being used in the city where the farm is planned.
Thornaby-based FMI Minecraft Management LTD is the company reportedly behind the around USD $45 million project which is planned to be built near the city of Zapala in the southern Neuquen province. The area is close to “Vaca Muerta,” one of the largest shale oil and gas deposits in the world.
According to the company’s website, potential investors in the crypto mine could benefit from the mine’s close proximity to the hydrocarbon reserves to power the mining; energy prices below $0.03c, relative proximity to both Pacific and Atlantic port cities, as well as the added attraction of “No Taxes to import Asisc (sic) [bitcoin mining hardware] or anything else,” thanks to the mine’s proposed location within a free trade zone.
Despite all these benefits, crypto mining requires a huge amount of electricity to power server farms, computers and graphics cards used in the process of mining tokens such as Bitcoin.
Martín Álvarez Mullally, an environmental activist and researcher at the Petróleo Sur Observatory, told local media outlet Página 12, that “with this project, there is environmental damage related to the consumption and generation [of electricity].”
He added that the Vaca Muerta region has seen an increase in seismic activity related to hydrocarbon extraction, and criticized Vaca Muerta for being Argentina’s go-to solution to its energy problems. “They are projects for high-income consumers, like that cryptocurrency mining farm,” he said.
Argentina has been struggling with how to deal with crypto miners who are flocking to its southern region to take advantage of cold temperatures to keep their servers cool year-round.
On the picturesque archipelago of Tierra del Fuego at the southern tip of Argentina, crypto mining accounts for 22% of the total energy consumption in the region. Earlier this year the government excluded crypto miners from energy subsidies in Tierra del Fuego if they go over a certain amount of energy used. On the other hand, the government of northern-province of Chaco announced an agreement with another crypto company to start solar-powered mining operations.
Argentina is the leading country in the region for cryptocurrency adoption and top 10 in the world, according to a December 2021 poll. At the time of the poll, the pollsters estimated there were 3 million active crypto investors in Argentina — which has a population of over 45 million people. Also, during 2021, 12 out of 100 Argentine adults bought crypto for savings or investment, leading the region.
For his part, Fernando Montero, CEO of the Zapala Free Trade Zone where the mining project is set to be constructed, downplayed the environmental risks and highlighted the commercial zone’s goal to become a technology hub in Argentina.
Mr. Montero told Pagina 12, that old crypto mining machines will not be left as scrap because they can be re-exported, and said, “the contamination is not such: what will be used are natural resources to generate work and to put Neuquén on the world technological development map.”
The first phase of the project will require USD $20 million and is expected to be completed by the first quarter of 2023.