Paraguayan senators have put a pause on the proposed ban on cryptocurrency mining, and are now considering the option of selling surplus energy from the Itaipu hydropower plant to miners instead of exporting it to Brazil and Argentina.
During a senate session on April 10, Senator Lilian Samaniego confirmed that there will be a debate in a public hearing on April 23 to weigh the pros and cons of Bitcoin mining in the country.
This development comes shortly after lawmakers introduced a draft law on April 4 to temporarily ban Bitcoin mining for 180 days, citing concerns about illegal cryptocurrency mines siphoning power and disrupting the country’s electricity supply.
However, just days later, Paraguayan lawmakers endorsed a declaration to support local and foreign investment infrastructure on April 8.
Senator Salyn Buzarquis hopes this move will prompt the Paraguayan Ministry of Industry to explore the economic benefits of selling excess energy to Bitcoin miners instead.
In a letter addressed to Congress on April 8, Buzarquis highlighted that the 45 licensed cryptocurrency miners are projected to contribute $48 million to the National Electricity Administration (ANDE) by 2024, a figure expected to rise to $125 million by 2025 as miners expand their operations.
Given that the cost of electricity production at Paraguay's Itaipu hydropower plant is approximately $22 per megawatt-hour (MWh), Buzarquis proposed that ANDE could achieve a net profit margin of 45% by selling excess energy to local Bitcoin miners at $40/MWh.
This calculation amounts to an annual revenue of $73 million and approximately $17 million in value-added tax for the treasury. Buzarquis further asserted that Bitcoin mining operations could potentially prevent ANDE from facing bankruptcy.
"This influx of funds is crucial for preventing ANDE from facing bankruptcy, enabling greater investment in infrastructure without the need to raise rates for Paraguayans."
Buzarquis pointed out that Paraguay currently sells energy to Brazil at a subsidized rate of $10 per megawatt-hour (MWh).
Moreover, during the April 10 senate session, Buzarquis emphasized that cryptocurrency mining has the potential to create additional employment opportunities for the local economy.
In the earlier April 4 bill, lawmakers highlighted 50 instances of power supply interruptions attributed to cryptocurrency miners illegally accessing electricity sources since February.
If enacted, this bill could have implications for one of the largest industry players, Marathon Digital Holdings, which expanded its operations into Paraguay last November, deploying 27 megawatts around the Itaipu hydroelectric power plant.
The controversy in Paraguay unfolds as Bitcoin miners gear up for the upcoming Bitcoin halving event scheduled for April 20. This event is expected to reduce miner rewards from 6.25 BTC (equivalent to $442,000) to 3.125 BTC (equivalent to $221,000).
April 2024, Cryptoniteuae