The Paraguayan economy could suffer significant losses if a bill to ban cryptocurrency mining is passed by lawmakers. The draft bill was introduced due to concerns that illegal crypto mines are stealing power and disrupting the country’s electricity supply. If the ban is approved, it would last for 180 days or until new laws are enacted and the national power grid operator can ensure adequate energy supply. Banning legal mining operations could cost Paraguay over $200 million per year.
According to Jaran Mellerud, the co-founder and chief mining strategist of Hashlabs Mining, Paraguay may lose this amount assuming it has 500 MW of legal miners paying $0.05 per kWh in operating expenses. This loss would be significant considering the size of Paraguay’s economy, with a population of only 6.8 million people and a GDP ranked 94th in the world.
Bitcoin mining has had a positive impact on Paraguay’s trade balance thus far, providing a boost to the economy. Currently, Bitcoin mining firms are required to register and obtain authorization from the Paraguayan Ministry of Industry and Commerce. One of the major players in the industry, Marathon Digital Holdings, could be affected if the bill passes as they have been operating around the Itaipu hydroelectric power plant.
The Itaipu dam has been a popular location for miners due to its ability to supply all of Paraguay’s electricity needs and leave a surplus for mining operations. These operations have allegedly caused power interruptions and damages. The National Electricity Administration estimates that each mining operation has caused losses of up to $94,900, with annual losses in the Alto Paraná area potentially reaching $60 million.
There is a concern that illegal mining operations draw too much electricity from low voltage lines, which can harm the grid. Similar issues occurred in Kazakhstan a few years ago, leading the government to crack down on illegal mining operations in the country.
Paraguay and Argentina have been attractive locations for United States-based miners due to lower electricity costs. The controversy surrounding the bill comes at a time when Bitcoin miners are preparing for the upcoming halving event, which will reduce their rewards by half.
The proposed bill to ban cryptocurrency mining in Paraguay may have severe economic consequences for the country. It could result in annual losses of over $200 million and impact the trade balance. Concerns about power disruptions and damages caused by illegal mining operations have prompted lawmakers to consider this drastic measure. The outcome of the bill will have significant implications for the future of the cryptocurrency industry in Paraguay.
This bill has the potential to change the entire future of the cryptocurrency industry in Paraguay. Let’s hope for the best outcome!
How can they even think about passing this bill? It’s unfair to punish all miners for the actions of a few illegal operations. Paraguay will suffer greatly if this ban is approved.
😡 This bill is a disaster! Banning cryptocurrency mining will only harm Paraguay’s economy and cost us millions of dollars! We need to find a better solution to address the power issues instead of shutting down an entire industry.
Paraguay cannot afford to lose $200 million per year. This bill needs serious reconsideration!