The global economic landscape is one of constant change and fluctuation. A fact that is closely linked to the social conditions of each nation and the technological advances that are appearing on the international scene.
Indeed, this is especially true when we talk about cryptocurrencies and the economic and financial phenomena surrounding them. Well, this type of currency has an increasing place and acceptance in the world of finance. Both for business and banking entities, as well as for ordinary people.
In this particular, the movement, obtaining, and acceptance of cryptocurrencies such as Bitcoin or Ethereum varies depending on the country we analyze. Some countries in the region welcome the advancement of legislation that standardizes crypto-ass management. Find out which countries in the region encourage the use of cryptocurrencies and which prohibit it. We will tell you about the mining landscape!
What is cryptocurrency mining?
In fact, to begin to understand the legal landscape of cryptocurrencies in Latin America, you must first ask yourself a fundamental question: What is cryptocurrency mining?
Firstly, Bitcoin mining (and, by extension, other cryptocurrencies) consists of generating blocks for the network. This process boils down to a network of miners competing with each other to find a solution to a crypto puzzle for their current block.
In turn, this is achieved through a Proof-of-Work (PoW) system, which solves a problem that requires several repetitive attempts by brute force. The probability of hitting the solution depends on the computational power that a miner contributes to the overall network relative to the combined computational power of all nodes. This is what allows the system to work in a decentralized way.
By the way, once a miner has obtained the numerical solution to the crypto puzzle of his block, he transmits it to the rest of the nodes to which he is connected. If the block is valid, the nodes add it to their chain and broadcast it indefinitely until it reaches all the nodes in the network to which it belongs.
Evolution of the mining network
In the early days of mining networks, it was perfectly plausible to mine individually using a standard CPU. To get a block and its rewards with a high frequency.
Eventually, technological advances in the field made possible the appearance of specialized software adapted to work with graphics cards, also known as GPUs.
This much more efficient system made CPU mining obsolete. However, the cost of extraction lies in the fact that this method involves considerable energy expenditure. Fact criticized to spare by ecologists because the environmental impact is not negligible.
Acceptance and standardization of cryptocurrencies
Likewise, as mining processes have evolved and access to cryptocurrencies has been democratized among the general population, the penetration of this alternative method of finance has been deeply permeating the daily lives of millions of people in the world.
The appearance of various wallets and the acceptance of this type of coin by financial institutions have made it possible to pay for goods or services with cryptocurrencies. At the same time investing in businesses and even creating a savings base that is used more and more every day.
For example, many online casinos and bookmakers have adopted cryptocurrencies as a valid currency when playing their games of chance and placing bets. For example, it is relatively easy to find an online casino in Chile that accepts cryptocurrencies as payment methods.
The legal situation of cryptocurrency mining in Latin America
In general, cryptocurrency mining is in a gray area in the region. With gaps and legal loopholes regarding this activity.
As a general rule, it is not considered illegal, with a few exceptions that we will discuss later. Furthermore, some countries have actively encouraged using cryptocurrencies in their territory. At the same time, some others are still deciding and analyzing legislation and regulations to regulate its use.
After all, this South American country is a pioneer in this regard since the use and mining of cryptocurrencies are fully legalized and encouraged by its legislation.
In the year 2021, El Salvador became the first country in the world to adopt Bitcoin as legal tender in its territory. As a result of this, the country’s financial institutions began to include Bitcoin in many aspects of daily life, and a national wallet called Chivo Wallet was even created.
Venezuela, Argentina, Cuba, Panama, and Mexico
As if that were not enough, in Venezuela, the government has promoted a series of measures to regulate and supervise the cryptocurrency industry in the country. Including mining and trading.
Similarly, in Argentina, two proposals have been presented to regulate cryptocurrencies in the country. Although none has come to fruition, crypto assets still lack legal support, although they are not expressly prohibited either.
In the same sense, the Central Bank of Cuba enabled using cryptocurrencies in commercial transactions throughout its territory in 2021.
For its part, in April of this year, Panama approved a bill that allows the use of cryptocurrencies as a means of payment.
Similarly, in Mexico, the Law to Regulate Financial Technology Institutions, also known as the FinTech Law, was enacted in 2018.
Ecuador and Bolivia
For its part, Bolivia was the first Latin American country to prohibit the use of any cryptocurrency expressly, and Ecuador has a similar position. However, it still needs to enact a law that strictly vetoes the use of these assets.
In general, the cryptocurrency landscape in the Latin American region is gray, since, except Bolivia and Ecuador, no country strictly prohibits the use of cryptocurrencies nor criminally persecutes those who mine them.
In closing, there is still a long way to go in the legal field in this regard. But the auspices are good since more and more nations in the region are considering legalizing and standardizing crypto assets in their territory.