Ban on Bitcoin mining in Paraguay could result in annual losses of $200M

A bill recently introduced in Paraguay to ban crypto mining could result in an annual loss of over $200 million for the country’s economy. Lawmakers claim that illegal cryptocurrency mines are stealing power and disrupting the country’s electricity supply. If passed, the ban would last 180 days or until new laws are enacted and the national power grid operator can ensure sufficient energy supply. However, banning lawful miners in the region could prove costly for Paraguay. Bitcoin mining has made a significant positive contribution to the country’s trade balance, according to Jaran Mellerud, co-founder and chief mining strategist of Hashlabs Mining. Paraguay, with a population of 6.8 million people and a GDP of $41.7 billion, is not accustomed to markets of this size. Bitcoin mining firms currently need to register and receive authorization from the Paraguayan Ministry of Industry and Commerce. Marathon Digital Holdings, one of the industry’s largest players, may be impacted by the bill. The Itaipu hydroelectric power plant has become a popular site for miners due to its excess electricity supply. However, there have been cases of interrupted power supply linked to cryptocurrency miners illegally tapping into these sources. Each cryptocurrency mining operation is estimated to have caused damages and losses of up to $94,900, and total annual losses in the area could reach $60 million. Similar situations in Kazakhstan led to the government cracking down on illegal mining operators. Jaran Mellerud previously stated that Paraguay and Argentina would attract an influx of US-based miners due to lower electricity costs. The controversy in Paraguay coincides with the upcoming Bitcoin halving event on April 20, which will reduce miner rewards from 6.25 Bitcoin to 3.125 Bitcoin.