Paraguay is now contemplating an alternative to the proposed comprehensive ban on Bitcoin mining.
The country’s lawmakers have reflected upon the bill that would have imposed a ban on cryptocurrency mining by stopping its trail and shifting the issue to using the excess energy from Itaipu to power the mine rather than exporting it to Brazil and Argentina.
A public hearing scheduled for February 23 will weigh the advantages and disadvantages of Bitcoin mining in the country. This move came after a draft law was introduced on April 4, which intended to implement a temporary 180-day ban on Bitcoin mining, aimed at the illegal mining activities that were said to be interfering with the supply of electricity in the country.
Economic Aspects and Legal Approaches
In that regard, the senators of Paraguay suggested a more economic-oriented alternative. Senator Salyn Buzarquis, in a letter to Congress on April 8, emphasized the financial benefits of selling excess energy to Bitcoin miners. He estimated that the 45 licensed cryptocurrency mining operations would contribute $48 million to the National Electricity Administration (ANDE) by 2024, with the expectation that this figure will rise to $125 million in 2025.
Today We approved a Declaration WHEREBY THE SENATE OF #PARAGUAY SUPPORTS LOCAL AND FOREIGN INVESTMENTS IN INFRASTRUCTURE AND URGES THE MINISTRY OF INDUSTRY TO STUDY THE ECONOMIC ADVANTAGES OF SELLING OUR SURPLUS ENERGY TO THE #CryptoMining INDUSTRY. #BITCOIN pic.twitter.com/1sxptd5c8E
— Salyn Buzarquis (@SalynBuzarquis) April 10, 2024
The cost of electricity generation at the Itaipu hydropower plant is around $22 per megawatt-hour (MWh). ANDE could realize a 45% net margin by selling surplus power to local Bitcoin miners at $40/MWh. This configuration would generate yearly profits equal to $73 million and an additional $17 million in value-added tax to the national coffers.
According to Buzarquis, these resources will be very important to prevent ANDE from bankruptcy so that more investment could be made in infrastructure without raising rates for Paraguayan citizens.
Employment and Economic Prospects
The discussion about Bitcoin mining in Paraguay is part of a bigger issue that involves the local economy, including employment. The transition towards the appropriation of crypto mining infrastructure constitutes both a significant source of income for ANDE and a way to stimulate job creation within the country.
Moreover, the review of the intended ban on mining is coming at a crucial time for the Bitcoin mining industry. This is because the Bitcoin halving event is due on April 20. Major industry stakeholders, including big miners like Marathon Digital Holdings, which has invested heavily in a mining operation close to the Itaipu plant, have their eyes on this event, which will reduce miner rewards by half.
