Regulation
Paraguay to evaluate strengthened regulations 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 who , they hope, will tackle endemic corruption, rising crime and economic inequality, with the election potentially impacting the country’s future relationship with Taiwan. (Photo by NORBERTO DUARTE / AFP) (Photo by NORBERTO DUARTE/AFP via Getty Images)
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Paraguay is considering stricter regulations regarding bitcoin mining in the country. Despite all the excitement over the cheap price of electricity in the country among the Bitcoin community in recent years, the local government is now looking for ways to better control this activity. 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 prohibit the storage and trading of cryptocurrencies. One of the main arguments in favor of its debate is that the country has many illegal Bitcoin mining operations. The ban will last at least six months and regulators have said the aim 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 this becomes law, it would directly affect the 50 legally operating mining companies that have contracts with the National Energy Administration, with contracts ranging from 6 MW to 100 MW,” Joaquín Morinigo told me, Paraguayan bitcoin analyst, in an interview. “It would also impact all cryptocurrency users in Paraguay by prohibiting the trading and storage of these assets,” he stressed. Morinigo was among the first X users to job comments on the potential new law.
Paraguay occupies a unique position in the Bitcoin mining industry, being one of the most attractive locations in Latin America for Bitcoin miners. It is one of the few countries in the world with almost 100% hydroelectric generation capacity, operating 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 these types of businesses.
According to data from the World Economic Forum, Paraguay is the country with the cleanest electricity production in the world, along with Albania, according to the United Nations Development Program. reported. But if the new law is passed, all this potential for bitcoin miners could be lost and, in fact, cryptocurrency users across the country would be affected.
“I think this proposal poses a threat to the development of Paraguay’s ecosystem. This proposal constitutes a direct violation of the individual freedoms of all citizens and residents of Paraguay, because it prohibits an industry that benefits the country,” Morinigo argued.
This is not the first time that the legislature has attempted to pass a law to further regulate crypto-related activities in the country. In 2022, the Paraguayan Congress rejected a similar proposal in December 2023. Congress abandoned this bill after failing to obtain the votes necessary to reject the veto it received from President Mario Abdo Benítez at the start of the year, like Bitcoin.com reported. At this time, the law sought to regulate the business as a commodity-based industry.
We do not know whether this new proposal will meet the same fate. But it shows that even under the administration of new President Santiago Peña, bitcoin mining and cryptocurrencies in general remain a concern for the country’s policymakers.