Paraguay's Senate Rethinks Crypto Mining Ban, Weighs Selling Surplus Energy to Miners Instead
Summary:
Paraguay's Senate has paused a proposed cryptocurrency mining ban, exploring the idea of selling surplus energy from the Itaipu hydroelectric plant to crypto miners instead. They believe the move could potentially generate significant revenue and employment opportunities. The turnaround will be discussed in a public hearing on April 23, and if successful, it could prevent major industry players like Marathon Digital Holdings from being affected by the ban. The shift in policy coincides with the upcoming Bitcoin halving event scheduled for April 20.
Paraguay's Senate has put a halt to a pending cryptocurrency mining ban that was presented just last week. Instead, they're now considering the advantages of selling surplus energy from their Itaipu hydroelectric facility to crypto miners rather than send it to Brazil and Argentina. This change of direction will be discussed at a public meeting on the 23rd of April, according to Senator Lilian Samaniego, during the Senate session held on the 10th of April.
Previously, a preliminary legislation was proposed on the 4th of April, aimed at banning Bitcoin mining for a minimum of 180 days due to allegations of illegal cryptocurrency operations stealing electricity and disrupting power supply in the country. However, just four days later, on April 8th, the lawmakers of Paraguay approved a declaration in favor of domestic and foreign investment infrastructure, which Senator Salyn Buzarquis is optimistic will encourage the country's Ministry of Industry to consider the economic benefits of selling surplus energy to Bitcoin miners.
In a correspondence to Congress on April 8th, Buzarquis highlighted that the 45 licensed cryptocurrency miners are projected to bring in $48 million for the National Electricity Administration (ANDE) by 2024. This figure is expected to rise to $125 million by 2025 as miners increase their equipment setup. Given that power production at Paraguay's Itaipu hydroelectric facility averages at about $22 per megawatt-hour (MWh), ANDE could reap a 45% net profit by selling surplus energy to local Bitcoin miners at a rate of $40/MWh, translating to approximately $73 million per year and about $17 million in value-added tax revenue for the treasury, according to Buzarquis. He further suggested that revenue from Bitcoin mining could possibly prevent ANDE from becoming insolvent.
Buzarquis also drew attention to the fact that Paraguay currently sells power to Brazil at a subsidized rate of $10/MWh. In the Senate session held on April 10th, he further mentioned that cryptocurrency mining could result in increased employment opportunities in the local economy.
The bill initially proposed on April 4th was primarily driven by the argument that since February, there have been 50 incidents of power outage related to unauthorized cryptocurrency miners drawing power from the grid. If the bill is approved, it could affect major industry names such as Marathon Digital Holdings, which established operations in Paraguay last November, including the setup of 27 megawatts around the Itaipu hydroelectric plant.
The discussion in Paraguay is unfolding just as Bitcoin miners are bracing themselves for the impending Bitcoin halving event set to occur on the 20th of April, which will reduce the miners' earnings from 6.25 BTC ($442,000) to 3.125 BTC ($221,000).
Published At
4/11/2024 7:22:25 AM
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