Proposed Crypto Mining Ban in Paraguay Could Cost Over $200M Annually
Summary:
A proposed legislative ban on cryptocurrency mining in Paraguay could cause the country to lose over $200 million each year. The bill, suggesting that illegal crypto mining operations are disrupting the country's power supply, could lead to a 180-day prohibition until new regulatory measures are established. The cessation on legal miners could come at a significant financial cost for the nation's economy. The proposed regulations could affect industry players such as Marathon Digital Holdings. The controversy in Paraguay comes ahead of the anticipated Bitcoin halving event on April 20.
A proposed bill to prohibit cryptocurrency mining in Paraguay threatens to yield potential losses exceeding $200 million yearly for the nation's economy. The proposal, initiated on April 4 by legislators, suggests that illicit crypto mining operations are pilfering power, leading to disruptions in the country's electrical supply. The proposed ban insists on a 180-day halt, extending until new regulation is established and power grid operation guaranteeing adequate energy provision is in place. However, this potential ban on legal miners may come at a hefty expense for the South American country, argues Hashlabs Mining's Co-founder and Main Mining Strategist, Jaran Mellerud, in a recent conversation with Cointelegraph. He stated: "A ban on bitcoin mining can cost Paraguay more than $200 million annually with legal miners assumedly using around 500 MW and paying operating expenses at $.05 per kWh." Enormous markets are unusual in Paraguay, home to merely 6.8 million inhabitants and ranking 94th in terms of largest GDP globally at $41.7 billion, as per Worldometer's 2022 data. Mellerud further claims that bitcoin mining made a "substantial positive impact on Paraguay's balance of trade." For current operations, bitcoin mining companies are required to seek registration and authorization from the country's Ministry of Industry and Commerce. This proposed bill may affect Marathon Digital Holdings, a significant industry player, that rolled out 27 megawatts in the vicinity of Itaipu's hydroelectric power plant last November. The Itaipu dam's surplus electricity lures miners and meets all local energy needs of Paraguay. Although most of this excess power is exported to Brazil at low rates, bitcoin miners willing to pay slightly more have been taking advantage recently. Legislators report 50 instances of power supply disruption since February, allegedly due to illegal crypto miners tapping into power resources. The National Electricity Administration of Paraguay approximates that each illegal crypto mining operation has incurred damages upwards of $94,900, and annual losses in the Alto Paraná region housing the Itaipu plant could reach $60 million. Mellerud agrees that such unauthorized activities can potentially harm grid operations with excessive power consumption from low voltage lines. A similar scenario in Kazakhstan led to increased government regulation and expulsion of illegal mining operations from the country. As miners gear up for the anticipated Bitcoin halving event scheduled for April 20, controversy brews in Paraguay. The event will decrease miner rewards from 6.25 Bitcoin ($434,000) to 3.125 BTC ($217,000).
Published At
4/8/2024 7:43:59 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.