Lawmakers in Paraguay have put forward a bill proposing a temporary ban on crypto mining and related activities in the country. The bill aims to address the issue of illegal crypto mines that are stealing power and causing disruptions in the electricity supply. The proposed law would prohibit the installation of crypto mining farms and the creation, storage, and commercialization of cryptocurrencies. It also seeks to regulate crypto staking and wallets. The ban would be in effect for 180 days or until a comprehensive law is passed, and the National Electricity Administration (ANDE) ensures that enough energy can be supplied to crypto miners without affecting other users of the electrical system.
The draft law highlights the significant increase in crypto miners setting up in Paraguay, attracted by the country’s abundant hydroelectric energy. The Alto Paraná region, located in the southeast and bordering Brazil and Argentina, has become a popular destination for crypto miners. This region is home to the Itaipu hydroelectric dam, the world’s third-largest dam that supplies all of Paraguay’s domestic electricity needs. According to the draft, there have been 50 cases of power supply interruptions in the region since February, which are linked to illegal connections made by crypto miners.
ANDE estimates that each crypto mining farm causes damages and losses of up to $94,900 (700 million Paraguayan guaraníes), and the yearly estimated losses in Alto Paraná could reach $60 million (420 billion guaraníes).
The draft argues that implementing crypto regulations would allow Paraguay to better supervise the industry and address issues such as consumer protection, money laundering, and tax evasion. In 2022, Paraguay came close to passing a tax and legal framework for the crypto and crypto mining sector, but it was vetoed by then-president Mario Abdo Benítez due to concerns about the high power consumption of mining and its impact on the country’s sustainable energy system.