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Buenos Aires’ “Crypto Building,” Innovation Or Marketing Ploy? Here’s The 411

The Next Pampa 2.0 will be the world’s first “Crypto Building”. In the basement, there’ll be a bitcoin mining farm that will help pay for all the upkeep a modern building needs. They also plan to show NFTs in the lobby and whatnot. Is the real state project just trying to be “the world’s first” at something? Or are the builders on to something here?

The crypto building’s construction will begin in Belgrano, Buenos Aires, in Q2 2022. It will have “more than 100 apartments, with either 2, 3, or 4 bedrooms, and many of them have already been pre-sold” at around $120K for a 2-bedroom one. Does that price get you a share of a bitcoin mining operation for as long as you keep a property in the crypto building? That’s what it sounds like. 

According to Interesting Engineering, the Next Pampa 2.0 “can be described as a 24-floor “smart” building with a Bitcoin mining farm in its basement, the objective of which is to generate an income for the building’s operations, allowing it to cover the cost of the edifice’s maintenance and upkeep —and savings its residents the costs of having to do so themselves.” It’s worth noting that the crypto building “will also display different pieces of NFT art as decoration in its lobby.” So, it’s not a bitcoin-only project.

What About Bitcoin’s Volatility? 

To address the volatility issue, the publication consults with Damian Lopo, the Next Pampa 2.0’s main project developer. He knows what to do. “To deal with this, the plan is to calculate an average price for the Bitcoin over the last 12 months and use that average price to scale the mining farm in a way that theoretically will allow the mining operation to cover 100% of the cost of the building’s expenses.”

Also, David Farías, the CEO of Landium, the real estate agency behind the Next Pampa 2.0 thinks that the bitcoin mining operation will generate more than the building needs. “The surplus could then be distributed among the residents; the crypto building could end up “paying residents” for living in it. “It’s a way of giving back to our customers,” said Landium’s CEO.”

BTC price chart for 06/02/2022 on Eightcap | Source: BTC/USD on TradingView.com
The Crypto Building ’s Solar Panels

In some aspects, Argentina is good soil for the crypto building. For example, in the capital, the government subsidizes energy, and is thus cheap. In some other aspects, the bitcoin mining strategy might prove to be erroneous. “There are currently no laws regarding crypto mining, but Damián Lopo doesn’t rule out that possibility”. Argentina recently signed a deal with the IMF in which they promised to slow down crypto adoption in the country.

On the other hand, there are ESG risks. Some people think that bitcoin is not worth the effort and that participants in the network shouldn’t be allowed to use electricity. However, they ignore the subtle relationship that exists between bitcoin and green energy. They always show up hand in hand.

In this case, “Damián Lopo expects Next Pampa 2.0’s expenses to be up to 50% lower — as the building will be powered by solar panels in its totality, from LED lights in common spaces to pre-heating systems to heat the water that residents will use.” Green energy will power all that plus the bitcoin mining. Great, but, what’s the fundamental difference between the crypto building and a normal building with bitcoin home miners among the tenants?  

Featured Image by Nestor Barbitta on Unsplash | Charts by TradingView

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How Do Crypto Profits Impact The Housing Market? An Informal Report

Is the housing market in a bubble? Is the cryptocurrency party about to blow up? This informal study is fascinating because it doesn’t come from the crypto world. The author, Rick Palacios Jr., is the Director of Research at John Burns Real Estate Consulting. The results are surprising, to say the least. Especially considering how early we are. Whatever camp you’re in, one thing’s for sure, cryptocurrencies will be a big factor for the rest of the decade. Maybe for the whole century, even.

Related Reading | Virtual Real Estate Takes Off With Backing From Billionaire Mike Novogratz

Palacios Jr. begins by painting the current situation’s general picture:

 “Low interest rates and a world awash in liquidity set the stage for financial markets and asset-value froth as an adult today. As market participants, we watch with a healthy dose of nervousness, wondering just how long we’ve got until the inevitable bubble-bursting cleanup ensues.”

Even though the housing market is on the rise, “this period of ephemeral effervescence isn’t sustainable.” He doesn’t get into the rampant money printing that his country is living with, but we will. Inflation is one of the effects of all of these inorganic dollars entering the market. Another effect is that people feel, maybe subconsciously, that their money is losing purchasing power and turn to hard assets. Before Bitcoin, real state was the hardest asset there was. It’s only logical for the newly printed money to make its way to the housing market, raising prices.

An Informal Survey And Its Surprising Results

“Trying to gauge crypto & NFT boom impact on housing market.” To test his hypothesis, the researcher turned to Twitter. His question was, “Have you or someone you know used profits from crypto and/or NFTs to help with the down payment of a home purchase?” In 72 hours, Palacios Jr. received 385 votes. 

Trying to gauge crypto & NFT boom impact on housing market. Have you or someone you know used profits from crypto &/or NFTs to help with down payment on home purchase?

— Rick Palacios Jr. (@RickPalaciosJr) September 4, 2021

“To my amazement, 20% of respondents indicated yes, they had indeed used profits from crypto and/or NFTs to help with the down payment on a home purchase. Heading into the survey, my ballpark estimate would have been below 5%, probably closer to 1% or 2% if you’d asked me to place a bet. Yes, the Twittersphere likely understands and uses crypto/NFTs more than the general adult population, but still, 20%!”

If NewsBTC ran this poll through our Twitter account, numbers this high would be somewhat surprising. However, Palacios Jr.’s audience is not a crypto audience. His tweets are usually about the housing market. So, these numbers are outstanding. What’s happening here?

BTC price chart for 11/25/2021 on Coinbase | Source: BTC/USD on TradingView.com
Conclusions About The Housing Market

After the survey, Palacios Jr. turned to his contacts in the real state business. He found out that “the percentage of home buyers voluntarily documenting crypto accounts during mortgage underwriting has gone from almost 0% one year ago to between 5% and 10% today.” In the case of down payments, though, “most lenders and builders I spoke with estimating the percentage at roughly 5% or less. On occasion, 10% to 15% was noted, namely in higher price points and/or communities skewing toward younger buyers more familiar with crypto.”

Over the last few months I’ve spoken with dozens of real estate & mortgage industry executives, trying to gauge what impact (if any) #crypto is having on the #housing market. Here’s what I’ve concluded. (1/) https://t.co/cNdaPrMSdY

— Rick Palacios Jr. (@RickPalaciosJr) November 16, 2021

So, the phenomenon is real. Also, take into account that “most home buyers don’t disclose crypto accounts, as it is voluntary and not required.” Also, there’s still some stigma attached to cryptocurrencies. To qualify for loans and to get cleared by real state agencies, “Most home buyers are liquidating crypto gains well ahead of purchasing a home for the funds to appear “seasoned” during underwriting (typically sitting two to three months in a traditional checking or savings account).”

Related Reading | The Game Changer: Real Estate Investment for Everyone

So, are crypto and the housing market in a bubble? They may very well be, but we can’t be sure. This informal study’s conclusion is that the cryptocurrency market is probably feeding the housing market’s growth. To what degree? That’s the million-dollar question.

Featured Image by June on Unsplash – Charts by TradingView