Lawmakers in Paraguay have introduced a bill proposing a temporary ban on crypto mining and related activities in the country. The bill aims to address the issue of illegal crypto mines stealing power and causing interruptions in the electricity supply. If enacted, the law would ban the installation of crypto mining farms and the creation, conservation, storage, and commercialization of cryptocurrencies. The ban would last for 180 days or until a comprehensive law is passed, and the National Electricity Administration (ANDE) ensures that it can meet the energy demands of crypto miners without affecting other users of the electrical system.
The draft law highlights the significant increase in crypto miners setting up operations in Paraguay, attracted by the abundance of hydroelectric energy in the country. The Alto Paraná region, which borders Brazil and Argentina, has been particularly popular among crypto miners due to its proximity to the Itaipu hydroelectric dam, the third-largest in the world. However, the region has experienced numerous cases of power supply interruptions caused by crypto miners illegally connecting to the grid.
ANDE estimates that each crypto mining farm causes damages and losses of up to $94,900 (700 million Paraguayan guaraníes), and the yearly estimated losses in the Alto Paraná region could reach $60 million (420 billion guaraníes).
The draft argues that implementing crypto regulations would allow Paraguay to better supervise the industry and address issues related to consumer protections, money laundering, and tax evasion. In 2022, Paraguay came close to passing a tax and legal framework for the crypto and crypto mining sector, but it was vetoed due to concerns about the high power consumption associated with mining and its potential impact on the country’s sustainable energy system.