Paraguay Temp Crypto Mining Ban Is Crippling Grid Of Floating Illegal ‘Farms’
Paraguayan lawmakers have proposed a bill to temporarily ban crypto mining and related activities in the South American country, saying illegal crypto miners are stealing power and disrupting electricity supplies.
Introduced on April 4, the bill prohibits the “planting of crypto-mining farms” with the creation, custody, storage and trading of cryptocurrencies (translated).
The broad scope seems to be crypto staking – “the creation of new crypto assets” – and wallets – “to manage the maintenance and storage activities of crypto assets.”
The ban is for 180 days – about six months – or until the full law is passed and the power grid operator, the National Electricity Authority (ANDE), guarantees that it will provide enough power to crypto miners “without affecting other users of Paraguay's electricity system.”
The crypto miners established in Paraguay are attracted by the “high hydroelectric power” shown in the draft.
Crypto miners from the Alto Paraná region, located in the county's southeast bordering Brazil and Argentina, have flocked to the draft states. The area contains the Itaipú Hydroelectric Dam – the world's third largest, supplying all of Paraguay's domestic electricity needs.
Since February, the region has seen 50 cases of power outages linked to crypto miners secretly and illegally tapping into the grid, he said.
ANDE estimates that each so-called “crypto mining farm” causes up to $94,900 in damages and losses, and says that annual losses in Upper Paraná can reach up to $60 million.
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The draft crypto regulations mean that Paraguay will better regulate the industry, and the legal loophole is creating issues for Paraguay with digital assets short of consumer protection and money laundering and tax evasion.
In the year Paraguay came close to passing a tax and legal framework for the crypto and crypto mining sector in 2022, but was rejected by then-President Mario Abdo Benitez, who claimed that mining's high energy consumption would hinder the development of a sustainable energy system.
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