Paraguayan Senators Propose Temporary Ban on Bitcoin Mining

A group of Paraguayan senators has introduced a bill in Congress to temporarily ban cryptocurrency mining and related activities.

According to the politicians, illegal digital asset mining operations are stealing electricity, leading to supply disruptions for the population.

They have proposed a 180-day moratorium on the “installation of new crypto farms” and the “creation of new crypto assets.” The ban also covers operations involving the storage of virtual currencies that require intensive electricity consumption.

According to the document, the specified period may be extended until:

• regulations for cryptocurrency companies are developed;
• the National Electricity Administration (ANDE) ensures that its infrastructure can supply energy to miners without affecting other consumers.

The authors of the document noted that in 2022, Paraguayan President Mario Abdo Benítez vetoed a bill regulating cryptocurrency mining and trading. Current regulations regarding the industry only establish the relationship between ANDE and digital asset miners in terms of tariffs.

The senators pointed out that there is a mining boom in the country. Most of the activity is concentrated in the Alto Paraná province, home to the Itaipu Dam, the second most powerful hydroelectric plant in the world, which fully supplies the country’s energy needs.

Meanwhile, illegal cryptocurrency mining has significantly expanded in the region. Illegally connected mining farms are located in residential and other premises, and are only detected by their high energy consumption, according to ANDE.

According to the state agency, the activities of such enterprises have led to at least 50 cases of power outages as of February. On average, an illegal mining farm causes damage of 700 million guaraní (~$95,000) per month, with annual losses potentially reaching up to 420 billion guaraní (~$60 million), ANDE calculated.

The bill is at an early stage of consideration and has not yet been submitted to the relevant Congressional committee at the time of writing.

In the introductory section, the authors of the document made a factual error by categorizing Ethereum alongside Bitcoin as PoW coins, which are “obtained by solving complex mathematical problems,” and “mining requires a large amount of computer equipment.”

The network of the second-largest cryptocurrency by market capitalization transitioned to the Proof-of-Stake algorithm on September 15, 2022, following the major update known as The Merge.

In 2023, experts from Hashrate Index, assessing the development and prospects of Bitcoin mining in Paraguay, concluded that the country is becoming an important global center for the industry.

Earlier, American companies Sazmining and Marathon Digital initiated operations for mining the first cryptocurrency in the country.