Paraguay to reconsider Bitcoin mining ban, mulls selling energy to miners

Paraguayan senators have put a hold on the advancement of the recent proposal to prohibit cryptocurrency mining. Now, government officials are reconsidering the possibility of letting miners buy surplus energy from Itaipu hydroelectric power plant instead of selling it to Brazil and Argentina as before.

In a Senate session on April 10, Senator Lilian Samaniego announced that there will be a public hearing on April 23 to explore the pros and cons of Bitcoin mining in the country.

Approximately a week after legislators proposed a bill on April 4 to suspend Bitcoin mining for an initial period of 180 days, they argued that unlawful cryptocurrency operations were misusing power and causing chaos in the national power grid.

After a few days, Paraguayan legislators passed a resolution to encourage local and external investment in infrastructure on April 8. Senator Salyn Buzarquis from Paraguay is optimistic that this decision will motivate the Ministry of Industry to examine the potential economic benefits of letting Bitcoin miners purchase surplus energy.

Paraguay to reconsider Bitcoin mining ban, mulls selling energy to miners

In a letter to Congress dated April 8, Buzarquis mentioned that the 45 legally operating cryptocurrency mines are projected to bring in around $48 million for the National Electricity Administration (ANDE) by 2024. This amount is anticipated to rise to approximately $125 million by 2025 as miners plan to add more equipment.

At approximately $22 per megawatt-hour (MWh) for electricity production from Paraguay’s Itaupo hydropower plant, ANDE has an opportunity to earn a 45% profit by supplying excess energy to Bitcoin miners in the local market for around $40/MWh.

In simpler terms, this means that Bitcoin mining generates approximately $73 million in revenue for Buzarquis each year, and an additional $17 million is collected as value-added tax. Furthermore, Bitcoin mining could potentially prevent ANDE from experiencing bankruptcy.

“This flow of funds is what is going to save ANDE from going bankrupt; to be able to invest more in infrastructure and not to raise the rate for Paraguyans.”

Paraguay currently sells energy to Brazil at a subsidized $10/ MWh rate, Buzarquis noted.

In the Senate meeting on April 10, Buzarquis proposed that mining cryptocurrencies could create additional jobs for the local community.

Since February, illicit cryptocurrency miners have reportedly disrupted power supplies in at least 50 instances, according to the earlier April 4 bill that lawmakers discussed.

If this proposal is approved, it may significantly affect Marathon Digital Holdings, a major industry player that set up shop in Paraguay last November and established mining operations using 27 megawatts of power from the Itaipu hydroelectric plant.

In Paraguay, there’s been a lot of debate going on. This comes as Bitcoin miners get ready for the upcoming Bitcoin halving, scheduled for April 20. During this event, rewards for mining new Bitcoins will be reduced – from 6.25 Bitcoins (worth around $442,000) to just 3.125 Bitcoins ($221,000).

Read More

2024-04-11 07:42