Bitcoin mining, a significant contributor to Paraguay’s economic balance, is under threat of new legal regulations. Hashlabs Mining’s co-founder and chief mining strategist Jaran Mellerud argues that this sector positively affects the country’s trade balance and that a ban could harm the economy.
Paraguay Considers Ban on Bitcoin Mining
The country’s lawmakers are considering adopting a bill in the upcoming period that aims to ban cryptocurrency mining. However, if this bill is enacted, it is indicated that the Paraguayan economy could suffer losses of over $200 million a year.
Legislators brought up the bill on April 4th, pointing out that illegal crypto mines disrupt the country’s electricity supply and cause power theft. If this bill becomes law, the ban process will continue for 180 days, and the national electricity grid operator’s capacity to provide energy will be reviewed.
The Cost of the Ban Could Be Significant for Paraguay
According to Hashlabs Mining co-founder Mellerud, this ban could incur significant costs for Paraguay. Mellerud states that a ban targeting legal miners in the country could cost Paraguay more than $200 million a year. Considering the current energy infrastructure and operating costs, this situation could have negative effects on the Paraguayan economy.
Although Paraguay is a small player in the global economy, it has significant potential by hosting new and growing sectors like Bitcoin mining. Mellerud emphasizes the positive effects of Bitcoin mining on the country’s trade balance and states that the industry should be legally regulated in a sustainable manner.
Currently, Bitcoin mining companies operating in Paraguay must register with the Ministry of Industry and Commerce and obtain the necessary authorization. This aims to regulate the industry more orderly and contribute to the country’s economy.
BTC Mining Companies to Be Affected if the Bill Is Passed
A new bill concerning Paraguay’s energy resources could particularly affect the cryptocurrency mining industry. If the bill is passed, many companies, including one of the industry’s biggest players, Marathon Digital Holdings, could be affected.
Marathon Digital Holdings, which started building a 27-megawatt power plant around the Itaipu hydroelectric plant last November, faces potential impact from this bill.
The Itaipu Dam not only meets Paraguay’s local electricity needs but also produces surplus electricity, making it an attractive region for miners. However, recent incidents of intermittent power supply caused by illegal crypto miners exploiting these electricity resources are causing concern among authorities.
Concerns Begin to Surface
The country’s National Electricity Administration states that each crypto mining operation can cause significant damage. Estimates suggest that the annual loss in the Alto Paraná region, where the Itaipu power plant is located, could reach up to $60 million.
Speaking on the issue, Mellerud highlights that illegal operations could damage the grid. He recalls a similar situation in Kazakhstan, noting that the country crushed the industry and expelled illegal operators.
Low Electricity Costs
Mellerud mentions that low electricity costs in Paraguay and Argentina attract US-based miners, as these countries are rich in energy and could be attractive targets for miners.
These discussions in Paraguay come at a time when Bitcoin miners are preparing for the significant event of Bitcoin halving. Expected to occur on April 20th, this event will reduce miner rewards from 6.25 Bitcoin to 3.125 Bitcoin, which could lead to significant changes in the industry. Whether the bill will be passed and its effects on the sector will likely become clear in the coming days.
