Ban on Bitcoin mining might lead to an annual loss of $200 million.

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A proposed bill to ban Bitcoin mining in Paraguay could lead to significant economic losses, potentially costing the country over $200 million every year, according to the co-founder of Hashlabs Mining. This move comes amid concerns from lawmakers that unauthorized cryptocurrency mining operations are causing disruptions to the nation’s power supply. The proposed legislation, introduced on April 4, aims to halt crypto mining for 180 days or until the establishment of new regulations and assurances from the national power grid operator of adequate energy supply.

However, the prohibition of legitimate mining activities poses a financial risk to Paraguay, which has benefited from the economic contributions of Bitcoin mining. With a modest population of 6.8 million and a global GDP ranking of 94, based on 2022 data from Worldometer, Paraguay has seen a positive impact on its trade balance from the mining sector.

Currently, Bitcoin mining operations must secure authorization from the Paraguayan Ministry of Industry and Commerce to operate. The potential ban could affect major players in the industry, such as Marathon Digital Holdings, which began operations near the Itaipu hydroelectric power plant last November. The plant, a key location for miners due to its surplus electricity production, has attracted Bitcoin miners offering to purchase excess electricity at competitive rates, traditionally sold to Brazil at lower prices.

However, concerns have been raised about the impact of illegal mining activities on the power supply, with the National Electricity Administration citing significant financial losses and damage in the Alto ParanĂ¡ region, where Itaipu is located.

The debate over the proposed ban occurs as the Bitcoin mining community anticipates the upcoming halving event on April 20, which will reduce mining rewards, further complicating the economic landscape for miners in Paraguay and potentially driving the industry to seek more favorable environments in other energy-rich countries.

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