Paraguay Delays Crypto Mining Ban, Considers Selling Surplus Hydro Energy to Miners
Summary:
Paraguay's senators have put a pause on a proposed temporary ban on cryptocurrency mining to consider selling surplus energy from the Itaipu hydropower plant to miners instead of exporting it to neighboring nations. The implications of Bitcoin mining were addressed in a Senate session on April 10, with the pros and cons set to be debated in a forthcoming public hearing. Earlier this month, a bill was proposed to halt Bitcoin mining for 180 days due to illicit mines disrupting the power supply. Notably, a mining ban could impact major player Marathon Digital Holdings, which expanded into Paraguay last year.
A temporary ban on cryptocurrency mining proposed in Paraguay has been delayed by senators, who are instead deliberating over selling surplus electricity from the Itaipu hydropower plant to miners, in place of exporting the energy to neighboring countries like Brazil and Argentina. On April 23, a public discussion will be organized to weigh the pros and cons of Bitcoin mining, said Senator Lilian Samaniego in a senate assembly on April 10.
This development comes after a draft legislation was put forward on April 4 suggesting a temporary mining suspension for 180 days, alleging unlawful crypto mines were guilty of power theft and disruption of the electricity supply within the nation. However, legislation supporting local and foreign investment infrastructure was approved on April 8 by Paraguayan legislators. Senator Salyn Buzarquis hopes this move will prompt the Paraguayan Ministry of Industry to delve into the potential monetary benefits of offering surplus energy to Bitcoin miners.
On April 8, Buzarquis articulated in a letter to Congress that about 45 authorized cryptocurrency miners are predicted to yield a revenue of $48 million for the National Electricity Administration (ANDE) by 2024, which is projected to escalate to $125 million by 2025 with increased equipment installations. Given the current around $22-per-megawatt-hour (MWh) cost of electricity production at Itaipu, selling excess electrical energy to local Bitcoin miners at $40/MWh could allow ANDE to realise a net 45% profit margin. This would translate to an annual return of approximately $73 million and nearly $17 million as value-added tax for the national treasury, Buzarquis stated, arguing that Bitcoin mining could potentially prevent ANDE from going bankrupt.
Buzarquis further noted that at present, Paraguay sells its energy to Brazil at a subsidised rate of $10/MWh. He added that cryptocurrency mining could stimulate job growth in the local economy.
The initial April 4th bill flagged 50 reported incidents since February of power disruptions, which were attributed to unlawful appropriation of energy by cryptocurrency miners. If enacted, this could have implications for Marathon Digital Holdings, one of the industry's heavyweights, which expanded its operations to Paraguay last November and located them around the Itaipu hydropower facility.
This unfolding situation in Paraguay aligns with Bitcoin miners ramping up for the forthcoming Bitcoin halving event slated for April 20, which will halve miner rewards from 6.25 BTC ($442,000) to 3.125 BTC ($221,000).
Published At
4/11/2024 2:53:57 PM
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