Paraguay’s Bitcoin mining ban could cost $200 million a year.

Paraguay's economy could lose more than $200 million if the country's lawmakers approve the recent bill.

Legislators introduced a bill on April 4, saying illegal cryptocurrency miners are stealing power and disrupting the country's electricity supply. If approved, the ban will last for 180 days or until new rules are passed and the national grid operator can ensure adequate power supply.

But a ban on legal miners operating in the region could be costly for the South American country, Jaran Mellerud, founder and chief mining strategist at HashLabs Mining, recently spoke to Cointelegraph.

“The country could spend more than $200 million a year on 500 megawatts of legal miners paying $0.05 in operating costs,” he said.

Markets of this size are not uncommon in Paraguay, according to Worldometer, citing 2022 data.

Bitcoin mining has made an important and positive contribution to Paraguay's trade balance up to this point, Mellerud argued.

Bitcoin mining companies currently need to obtain a license and register from the Paraguayan Ministry of Industry and Commerce.

If passed, the bill could affect players in the industry, including Marathon Digital Holdings, which began deploying 27 megawatts of the Taipu hydroelectric power plant last November.

The Itaipú Dam has become a popular site for miners to prepare because it supplies all of Paraguay's local electricity needs and leaves a large amount of electricity to tap into.

Much of this excess electricity has historically been exported to Brazil at low prices. However, Mellerud said that in recent months, a wave of bitcoin miners has come out at a slightly higher price.

But lawmakers said that since February alone, there have been 50 cases of power outages linked to cryptocurrency miners illegally using these electricity sources.

The country's National Electricity Authority estimates that each cryptocurrency mining operation has caused up to $94,900 in damage and losses, and in the Alto Paraná area – where the Itaipu power plant is based – could be as high as $60 million.

“Illegal actions can be harmful to the grid if it takes a lot of electricity from low voltage lines,” Mellerud admitted.

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A similar situation was seen in Kazakhstan a few years ago, when the Kazakh government finally decided to crack down on the industry and drive illegal mining operators out of the country.

Mellerud previously told Cointelegraph that Paraguay, along with Argentina, are flocking to America-based miners looking to expand or migrate to energy-rich countries due to the cost of electricity.

The controversy in Paraguay comes as Bitcoin miners prepare for the Bitcoin halving, expected to take place on April 20, which will cut mining costs from 6.25 Bitcoin (BTC) ($434,000) to 3.125 BTC ($217,000).

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