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Argentina’s tax watchdog busts illegal digital asset mining operations

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Argentina’s Federal Administration of Public Revenues (AFIP) has been on a raiding spree in the last few weeks, with illegal virtual currency miners being the main targets. The tax watchdog stated that since the crackdown began, three illegal mining operations have been uncovered in different provinces.

Divulging details of the operations, the AFIP said the first raid occurred last Tuesday in San Juan, where it uncovered the illegal operation nestled in the property initially used for processing agricultural products. The report failed to disclose the number of mining equipment seized nor the values of the seized digital assets.

Riding on the wave of a successful bust, operatives of the tax administrator carried out another raid in Buenos Aires, the country’s capital, where it seized 1,355 video cards and 142 mining rigs. The mining farm operated out of a commercial building which residents found incredulous that it was used for the mining of virtual currencies.

The state-run agency also confirmed that a third raid was conducted in Cordoba, but details were not revealed. AFIP stated that the attacks were not carried out arbitrarily but were the product of thorough investigations into the energy consumption rates of the buildings.

“It was possible to determine the existence of the exploitation within an establishment linked to another firm, which declares to carry out activities different from those found during the inspection, but which served as a screen to justify the consumption of electrical energy, thus concealing the economic reality of the place,” read the report.

Only a handful of mining companies have been given the license to operate in Argentina, but no official registry is available to track their operations. Drawn by cheap electricity, several mining farms have popped up around the country, primarily clustered in residential areas to take advantage of subsidized rates.

The miner capitulation

Argentina’s crackdown on the activities of illegal miners is a pointer to the increased persecution these entities face. Rising energy costs occasioned by the war in Eastern Europe have forced city administrators to crack down on illegal mining activity in their jurisdiction.

Kazakhstan, Iran, and Russia, countries that housed fleeing Chinese miners, have seen their energy supply buckle under the weight of increased miner activity. Falling asset prices and the criminalization of mining activity led to a miner capitulation, which saw miners sell off their digital currencies at the fastest pace since 2018.

In Texas, energy shortages have seen mining operations brought to a halt while some firms have been forced to shut down operations in exchange for electricity credits. The state’s grid operator disclosed that the recent shortages would be temporary, but with grim macroeconomic conditions, miners may have to brace themselves for a long ride.

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