Paraguay Proposes Temporary Ban on Crypto Mining to Curb Illicit Power Use
Summary:
Paraguayan legislators have proposed a temporary prohibition on cryptocurrency mining due to concerns about illicit power consumption. The draft law, introduced on April 4, also aims to regulate the creation, storage, and trading of digital currencies, targeting crypto staking and wallets. The proposed ban would last for about six months until comprehensive legislation is passed and the National Electricity Administration can guarantee power supply. The legislation refers to a surge in illegal crypto mining, predicting drastic yearly losses. It argues that crypto regulations would help oversee the industry and counteract issues raised by the industry's legal void.
Paraguayan legislators have proposed a temporary prohibition on cryptocurrency mining and associated activities. They contend that unlawful crypto mines are pilfering electricity, causing disruptions in power supplies. The proposed legislation, which was introduced on the 4th of April, seeks to outlaw the establishment of cryptocurrency mining farms and the generation, preservation, storage, and trading of digital currencies. The extensive scope of the draft law seems to also seek regulation of crypto staking – the generation of fresh crypto assets – and crypto wallets – the preservation and storage of these assets. The proposed prohibition would last for roughly six months or until complete legislation is adopted and the National Electricity Administration (ANDE), the power grid operator, can assure that it can supply sufficient energy to crypto miners without impacting other users of the Paraguayan electrical system.
The proposed legislation has taken note of the dramatic surge in crypto miners setting up operations in Paraguay, attracted by its ample hydroelectric power. Many of these miners have concentrated their operations in the southeast region of Alto Paraná, which borders Brazil and Argentina and is home to the world's third-largest hydroelectric dam, the Itaipu, which meets all of Paraguay's domestic electricity demand. Since February, the region has experienced 50 incidents of power disruptions attributed to crypto miners illicitly tapping into the grid. ANDE quantifies the damage and losses incurred by each "crypto mining farm" at approximately $94,900 (700 million Paraguayan guaraníes) and predicts that the yearly losses in Alto Paraná could escalate to as much as $60 million (420 billion Paraguayan guaraníes).
The draft legislation argues that regulations for cryptocurrencies would facilitate closer monitoring of the industry. The current legal void is generating complications for Paraguay in terms of providing consumer protections for digital assets and stymying their potential use in illicit activities like money laundering and tax evasion. In 2022, Paraguay almost succeeded in passing a legal and tax framework for cryptocurrencies and their mining, but it was vetoed by then-president Mario Abdo Benítez due to concerns about how the high power consumption of mining could hinder the expansion of a sustainable energy system.
Published At
4/5/2024 6:43:03 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.