Paraguay is thinking about lifting its ban on Bitcoin mining and considers selling electricity to miners

In Paraguay, legislators are considering alternatives to a widely debated ban on Bitcoin mining and will debate this issue later in the month.

After introducing a proposed ban on cryptocurrency mining last week, Paraguayan senators are now pausing to consider the potential benefits of selling surplus electricity from the Itaipu hydropower plant to cryptocurrency miners, rather than exporting it to Brazil and Argentina.

A public hearing scheduled for April 23 will explore the pros and cons of Bitcoin mining in Paraguay, as announced by Senator Lilian Samaniego during a Senate session on April 10.

This follows a proposal made on April 4 to impose a temporary 180-day ban on Bitcoin mining, citing illegal operations that have compromised the national electricity supply.

Nevertheless, a declaration was approved on April 8, supporting both local and foreign investment in infrastructure. This has led Senator Salyn Buzarquis to advocate for the Ministry of Industry to examine the economic benefits of selling extra energy to Bitcoin miners.

In a letter to Congress on April 8, Buzarquis highlighted that 45 licensed cryptocurrency mining operations could potentially contribute $48 million to the National Electricity Administration (ANDE) by 2024, with projections reaching $125 million by 2025 as more equipment is installed.

Selling surplus energy to Bitcoin miners at $40 per megawatt-hour (MWh), considering the production cost of $22/MWh at the Itaipu plant, could yield a 45% profit margin for ANDE. This would translate to an annual gain of $73 million, plus an additional $17 million in value-added tax for the treasury, according to Buzarquis. He also mentioned that Bitcoin mining could prevent ANDE from bankruptcy.

Paraguay currently sells electricity to Brazil at a subsidized rate of $10/MWh.

Additionally, cryptocurrency mining could boost local employment opportunities, as mentioned by Buzarquis in the Senate session on April 10.

The initial bill from April 4 pointed out 50 incidents of power supply disruptions linked to illegal connections by cryptocurrency miners since February.

The proposed legislation could affect significant industry participants, such as Marathon Digital Holdings, which began operations in Paraguay last November near the Itaipu plant.

This reevaluation in Paraguay coincides with the anticipation of the Bitcoin halving event on April 20, which will reduce the mining reward by half.