Paraguay to Reconsider Bitcoin Mining Ban, Sell Energy to Miners
Paraguayan senators halted progress on a proposed cryptocurrency mining project last week, with officials now considering the benefits of selling surplus power from the Itaipu hydroelectric plant instead of exporting it to Brazil and Argentina.
A public hearing will be held on April 23 to discuss the pros and cons of Bitcoin mining in the country, Senator Lilian Samanigo confirmed at the April 10 Senate meeting.
It comes nearly a week after lawmakers introduced a bill on April 4 that would ban bitcoin mining for at least 180 days, saying illegal cryptocurrency miners were stealing power and disrupting the nation's electricity supply.
However, days later, the Paraguayan legislators approved a statement to support domestic and foreign investment in infrastructure, four days later, April 8 – which Senator Salin Buzarquis hopes will push the Paraguayan Ministry of Industry to study the economic benefits of selling surplus power to Bitcoin miners instead.
In a letter to Congress on April 8, Bouzarkis revealed that 45 licensed cryptocurrency miners are on track to generate $48 million for the National Electricity Authority (ANDE) by 2024 – a figure that is expected to reach $125 million by 2025 after miners install more equipment.
With the cost of generating electricity from Paraguay's Itaipu hydropower plant hovering around $22 per megawatt hour (MWh), ADB can sell additional power to local Bitcoin miners at $40/MWh, generating a net profit margin of 45%.
This would save the treasury about $73 million a year and about $17 million in value-added tax, Buzarkius said, adding that Bitcoin mining operations could save Aden from filing for bankruptcy.
“This flow of money is what will save ADN from going bankrupt. Not to invest more in infrastructure and increase the number of Paraguayans.
Paraguay currently sells subsidized power to Brazil at a price of $10/MWh, Bouzarkis said.
Cryptocurrency mining can create more job opportunities for the local economy, Bouzarkis added at the April 10 Senate session.
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In a previous April 4 law, lawmakers argued that there had been 50 cases of power outages linked to cryptocurrency miners illegally using these electricity sources since February.
If approved, Marathon Digital Holdings, which expanded into Paraguay last November to deploy 27 megawatts around the Itaipu hydroelectric power plant, could affect one of the industry's biggest players.
The controversy in Paraguay comes as Bitcoin miners prepare for the Bitcoin halving, expected to take place on April 20, which will cut miner rewards from 6.25 BTC ($442,000) to 3.125 BTC ($221,000).
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