Regulation
Paraguay will consider strengthened regulation for Bitcoin mining
TOPSHOT – The Paraguayan presidential candidate of the Colorado Party, Santiago Peña (C), celebrates … [+] with his wife, Leticia Ocampos de Pea (right), and former Paraguayan president Horacio Cartes, after winning the presidential election in Asuncion on April 30, 2023. – Paraguayans went to the polls on Sunday to choose a president they hope for could address endemic corruption, rising crime and economic inequality, with elections likely to impact the country’s future ties with Taiwan. (Photo by NORBERTO DUARTE / AFP) (Photo by NORBERTO DUARTE/AFP via Getty Images)
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Paraguay is in discussions to establish stricter regulations on bitcoin mining in the country. Despite all the excitement the country’s low electricity prices have sparked in the bitcoin community in recent years, the local government is now looking for ways to better control this activity. The proposal, introduced on April 3 by the senatorial chamber of the National Congress, aims to temporarily ban bitcoin mining in the country.
This bill also aims to ban the storage and trading of cryptocurrencies. One of the main arguments supporting the discussion is that the country has many illegal bitcoin mining operations. The ban will last at least six months and regulators have said the goal is to protect consumers from risks related to virtual assets. This bill must pass through three more levels within Congress before arriving on the president’s desk.
“If it became law, it would directly affect the 50 mining companies that operate legally and that have contracts with the National Energy Administration, with contracts ranging from 6 MW to 100 MW,” the Paraguayan analyst explained to me in an interview of bitcoin Joaquin Morinigo. “It would also impact all cryptocurrency users in Paraguay by prohibiting the trading and storage of such assets,” he stressed. Morinigo was among the first X users to do so send comments on the potential new law.
Paraguay occupies a unique position in the bitcoin mining sector, being one of the most attractive places in Latin America for bitcoin miners. It is one of the few countries in the world with almost 100% hydroelectric generation capacity and operates two large binational hydroelectric dams with Brazil (Itaipu) and Argentina (Yacyreta). These green sources are not only interesting for bitcoin miners because of the cheap electricity, but also because of the growing importance of renewable energy for investors in this type of company.
According to data from the World Economic Forum, Paraguay is the country with the cleanest electricity production in the world, together with Albania, according to the United Nations Development Programme. reported. But if the new law were to pass, all this potential for bitcoin miners could be lost, and in fact cryptocurrency users across the country would suffer.
“I believe that this proposal is a threat to the development of the ecosystem in Paraguay. This proposal is a direct violation of the individual freedoms of all citizens and residents of Paraguay because it bans an industry that benefits the country,” Morinigo said.
This is not the first time the legislature has attempted to pass a law to further regulate cryptocurrency-related activities in the country. In 2022, the Paraguayan Congress scrapped a similar proposal in December 2023. Congress abandoned that bill after failing to get the votes needed to overturn the veto it received from President Mario Abdo Benítez earlier that year, like Bitcoin.com reported. At the time, the law was trying to regulate the business as a commodity-based industry.
It is unclear whether this new proposal will have the same fate. But this shows that even under the administration of the new president, Santiago Peña, bitcoin mining and cryptocurrencies in general continue to be a concern for the country’s politicians.