Paraguay could face significant economic losses of more than $200 million per year if a new bill banning cryptocurrency mining is passed by lawmakers. The draft bill, introduced on April 4, claims that illegal crypto mines are stealing power and disrupting the country’s electricity supply. If approved, the ban would remain in effect for 180 days or until new laws are enacted and the national power grid operator can ensure sufficient energy supply. However, the ban could prove costly for Paraguay, as it is not common for markets of this size to exist in the country. Paraguay, with a population of 6.8 million people and the 94th largest GDP in the world, has benefited from Bitcoin mining, providing a significant positive contribution to its trade balance. Bitcoin mining firms currently need to register and obtain authorization from the Paraguayan Ministry of Industry and Commerce. One of the industry’s largest players, Marathon Digital Holdings, may be impacted by the bill, as it began deploying 27 megawatts around the Itaipu hydroelectric power plant last November. The Itaipu dam has been a popular site for miners due to its ability to supply all of Paraguay’s local electricity needs and provide excess electricity for mining operations. However, lawmakers claim that cryptocurrency miners illegally tapping into these electricity sources have caused 50 cases of interrupted power supply since February. The National Electricity Administration estimates that each mining operation has caused damages and losses of up to $94,900, with total annual losses in the Alto Paraná area reaching up to $60 million. Similar situations have occurred in other countries, such as Kazakhstan, where the government cracked down on illegal mining operators. Paraguay, along with Argentina, has been attracting miners from the United States due to lower electricity costs. The controversy in Paraguay arises as Bitcoin miners prepare for the upcoming Bitcoin halving event on April 20, which will reduce miner rewards from 6.25 BTC ($434,000) to 3.125 BTC ($217,000).
Paraguay's Potential Loss: A Bitcoin Mining Ban Could Result in a $200 Million Annual Deficit