We cannot deny that we are in the midst of a “crypto wave”. Cryptocurrencies paved the way for crypto gambling and crypto art, and now we may even have a “crypto building”. At least that’s what a real estate project in Argentina, Next Pampa 2.0, was called in some media. But what is a crypto building?
In this case, it can be described as a 24-storey “smart” building with a Bitcoin mining farm in the basement, the purpose of which is to generate revenue for the building’s operations so that it can reduce the cost of maintaining the building. cover. and maintenance – and saves residents the cost of doing it themselves. The building will also display several NFT artworks as decoration in the lobby. These NFT artworks will be the property of the committee members and owners.
The Argentine crypto building will be located in Belgrano, an exclusive neighborhood in the capital Buenos NexAires. It has already been pre-launched, although actual construction is not expected to begin until the second quarter of 2022. It has been reported that the building will have more than 100 apartments, with 2, 3 or 4 bedrooms, and many of them are already pre-sold, with prices around US$2,500 per square meter (about US$120,000 for a 2-bedroom apartment) .
But bearing in mind that Bitcoin mining profitability varies with the value of the cryptocurrency (and Bitcoin actually is) in the middle of a crisis will living in a “crypto building” right now), besides energy costs, really be as profitable as the developers want it to be?
Next Pampa 2.0 was created by Newlink Capital, an investment group in Argentina that owns Landium, the brokerage firm that is marketing the world’s first ‘crypto building’.
Damian Lopo, founder of Newlink Capital and lead developer of the Next Pampa 2.0 project, explained that the company is well aware of Bitcoin’s volatility. To deal with this, the plan is to calculate an average price for Bitcoin over the past 12 months and use that average price to scale the mining farm in such a way that mining can theoretically cover 100% of the cost of construction costs. cover.
But in practice, Bitcoin price will likely continue to fluctuate long after the mining farm is in place. According to Damián Lopo, the best-case scenario is for Bitcoin’s price to rise to surplus values. The surplus could then be distributed among the residents; the crypto building could eventually become “paying residents” to live there. “It’s a way of giving back to our customers,” said David Farías, CEO of Landium CryptoPress†
For Damián Lopo, the worst results are 1) the price of Bitcoin crashes to such an extent that it is not possible for the Next Pampa 2.0 mining company to maintain the building; and 2) Bitcoin crypto mining is banned in Argentina.
According to an Report from the Law Library of Congress 2021Bitcoin crypto mining is banned in China, Nepal, Morocco, Iraq, Bangladesh, Egypt, Qatar and Tunisia. ‘s couch Russia has proposed a ban in January 2022, and Sweden claimed one within the EU last year. Both countries had provide energy that have not been resolved because Bitcoin has not made the move from proof of work to proof of stake – an alternative that uses fewer resources.
In Argentina, energy is relatively cheap and only financial institutions are prohibited from working with cryptocurrencies, due to the “risks associated with operations with these assets”. There are currently no laws regarding crypto mining, but Damián Lopo is not ruling out this possibility.
For the crypto building, both a Bitcoin price crash and a ban on Bitcoin mining means it could not cover its own costs as expected. But in this case, Next Pampa 2.0 has an asset in store: clean energy.
According to a report from the World Economic Forum, in 2020, renewable energy was the cheapest energy source worldwide. In particular, solar energy is the cheapest energy source in historyaccording to the International Energy Agency (IEA).
although electricity in Argentina is already considered cheap Because it is heavily subsidized (which has led to a large bitcoin mining industry in the country), the country can also benefit economically from renewable energy.
“For 1,000 megawatts of renewable energy, the country saves $300 million a year on liquid fuelArgentina’s Undersecretary for Renewable Energy Sebastian Kind said in 2018.
Renewable energy sources are also cheaper than fossil fuels for individual Argentines. According to Statista, household electricity in the South American country averaged $76.24/MWh in 2020, while the average price per megawatt per hour of solar energy ranged from $54 to $60.
This is why Damián Lopo expects the cost of Next Pampa 2.0 to be up to 50% lower – as the building will be powered entirely by solar panels, from LED lighting in common areas to pre-heating systems to heat the water residents will use. . An option that is also more sustainable than grid electricity, especially given that Argentina has recently started charging cryptominers much higher industrial use rates for their power, rather than heavily subsidized residential rates.
Solar equipment and bitcoin mining need maintenance at some point. Solar panels only need to be cleaned and/or checked occasionally during an annual inspection.
But Bitcoin mining rigs can get more than dirty; they can become obsolete because technology is constantly changing (and they can even produce) a lot of waste†
Damián Lopo explains that the Argentine crypto building will have to partner with a specialist company to take care of maintenance and upgrades of the mining equipment as needed. He expects decisions on this matter to be made like any other building committee decision.
Are you considering moving to the Argentine crypto building? It seems that you need to know more about the crypto world to attend these building committee meetings.