08 Apr

According to the co-founder of Hashlabs Mining, bitcoin mining has made a "positive contribution to Paraguay's trade balance," and a ban might harm the country's economy.

If a recently proposed plan to outlaw cryptocurrency mining in the nation is approved by lawmakers, the Paraguayan economy may suffer more than $200 million in losses each year.

On April 4, lawmakers unveiled the draft measure, arguing that illicit bitcoin mining is robbing the nation of electricity and stealing power. If approved, the national power grid operator would have to guarantee that there is enough electricity supply for 180 days, or until new regulations are implemented.

Large markets are also uncommon in Paraguay, which has a 6.8 million-person population and the 94th-highest GDP in the world ($41.700 billion), according to Worldometer, which cites statistics from 2022.

Up until now, Mellerud claimed, bitcoin mining has made a "significant, positive contribution to Paraguay's trade balance."

The Paraguayan Ministry of Industry and Commerce now requires registration and licensing for bitcoin mining companies.

One of the biggest companies in the sector, Marathon Digital Holdings, which began installing 27 megawatts around the Itaipu hydroelectric power plant in November of last year, may be impacted by the measure if it is approved.

Because the Itaipu dam provides all of Paraguay's local electrical demands and leaves a significant quantity of excess electricity to be used, it has become a popular place for miners to set up shop.

In the past, a significant portion of this extra electricity was cheaply exported to Brazil. Mellerud did point out that a surge of Bitcoin miners has recently entered the market at marginally higher pricing.

However, since February alone, MPs claim that there have been 50 instances of power outages connected to cryptocurrency miners illicitly using these energy sources.

According to the National Electricity Administration of the nation, the total annual losses in the Alto Paraná region, home of the Itaipu power plant, might reach $60 million. It is estimated that each cryptocurrency mining operation has resulted in damages and losses of up to $94,900.

According to Mellerud, "illegal operations can be harmful to the grid if they draw too much electricity from low voltage lines."

A few years ago, a similar scenario occurred in Kazakhstan, which finally prompted the authorities to crack down on the mining business and expel illegal miners from the nation.

The dispute in Paraguay arises as Bitcoin miners get ready for the anticipated April 20 Bitcoin halving event, which would reduce miner payouts from 6.25 Bitcoin (BTC) ($434,000) to 3.125 BTC ($217,000). 

April 2024, Cryptoniteuae

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