South of the Blockchain
As the crackdowns in China continue leading to the biggest drop in mining difficulty in history. According to Cointelegraph, “In four days, the difficulty will adjust down by an estimated 23.24% — something which has never happened before in Bitcoin’s lifetime.”
According to recent statistics the hash rate is now at around 83 exahashes per second (EH/s). This represents a greater than 50% drop since its peak of 168 EH/s. Now that China is in the midst of a miner migration where will its extremely large portion of hash rate end up? The answer to that question is wherever energy is cheap with decent infrastructure. Regions that are geared to take China’s place include South America and a few other developing countries such as well as India.
With El Salvador’s recent scheduling of Bitcoin as legal tender alongside the U.S. dollar and becoming the first country to officially integrate BTC into their financial system and passing a bill set to make Bitcoin legal tender on September 7. This landmark legislation has sparked a wildfire of support for the world’s number one digital currency by lawmakers all across South America.
Paraguay was soon to follow and although no action has yet to be seen Congressman Carlitos Rejala posted a promising tweet a few days after El Salvador’s announcement,
- “Paraguay’s Flag of Paraguay Deputy of the Nation, and Member of Congress, plans to present a #Bitcoin bill next month. Following El Salvador’s #Bitcoin bill.”
In just a few weeks since El Salvador’s president, Nayib Bukele, made headlines with his tweet setting off an earthquake that led to a South American tidal wave of tweets. The result was very similar promises from politicians across the continent. These include Brazil, Panama, Argentina, Nicaragua, and Mexico. Not only Mexican Sen. Indira Kempis de brought bitcoin into Mexico’s spotlight. This weekend Mexico’s third-richest billionaire Ricardo Salinas Pliego, who heads Banco Azteca, tweeted that “he is working to make his Banco Azteca the nation’s first bank to accept bitcoin.” Although Mexico’s central bank released a statement the following day making it clear that financial authorities in this state are not yet on board, “The country’s financial institutions are not authorized to carry out and offer to the public operations with virtual assets, such as Bitcoin, Ether, XRP.”
These two countries not only are making history by proposing and passing landmark legislation, but they also have incentivized themselves to become the beneficiaries of the mass hash migration. El Salvador has set itself up to profit more than any other Latin American country from Bitcoin’s mining migration out of China. By promising to set aside substantial amounts of cheap, clean, zero-emission and 100% renewable energy for Bitcoin mining operations. A few days later president Bukele seemed to have already delivered with another incredible tweet, “Our engineers just informed me that they dug a new well that will provide approximately 95MW of 100% clean, 0 emissions geothermal energy from our volcanos. Starting to design a full bitcoin mining hub around it. What you see coming out of the well is pure water vapor.”