Paraguay is emerging more and more in the cryptosphere as a land of mining. But, this does not please some authorities in the country at all. According to Paraguay’s national electricity agency, some players are mining bitcoin in secret and could affect the stability of the country’s power grid. This statement comes as the tug of war between the Senate and the head of state over the law allowing Bitcoin mining continues. It is possible that it is the absence of this law that creates an environment for continued illegality…
Mining affects electrical stability
Paraguay produces a significant amount of unused electrical energy. This energy surplus is a boon to Bitcoin miners who are moving into the country in droves. While some miners are registering with the authorities, others are taking advantage of the regulatory vacuum to conduct business clandestinely.
This has angered Paraguay’s national electricity authority, ANDE. The ANDE is very concerned that the mining activities carried out in secret could affect the country’s energy stability.
The National Electricity Administration of Paraguay reports that these secret Bitcoin mining activities are already common in the east of the country, precisely in the department of Alto Paraná.
The institution has even tried to fight them, but this is proving counterproductive so far. “While they disrupt one connection, two others connect,” explained Miguel Angel Baez, Technical Director of ANDE, among others.
The law authorizing mining still not in force
Surveillance and shutdown operations of underground Bitcoin mining activities are frequent in the country. But each time, they fail to deter underground miners. One factor in this failure is specifically the lack of a regulatory framework for crypto in the country.
Yet, on July 15, the Paraguayan Senate passed Bill No. 6962/2022 regulating the mining, commercialization, intermediation, exchange, transfer, custody and administration of cryptocurrency or instruments for the control of digital assets.
One of the main innovations of this text is that it recognizes the mining of cryptocurrencies as an industrial activity. This law even made this activity one of the main pillars of the country’s energy development.
Indeed, cryptocurrency miners could pay up to 15% less taxes than other industries. A much better option than selling excess energy to Brazil and Argentina at a low price, as Paraguay is currently doing.
But more than three months after its passage in the Senate, this law has still not come into force. At fault is the President of the Republic of Paraguay.
In an August 29 decree, Mario Abdo Benítez, opposed the bill recognizing cryptocurrency mining as an industrial activity in the country. Among other things, the head of state felt that crypto mining wastes a lot of energy without creating enough jobs for citizens.
It is undoubtedly this tug of war between the Senate and the president of the Republic that is causing illegal cryptocurrency mining to proliferate in Paraguay. This legal loophole is also depriving the country of significant tax revenues to neighboring Brazil. This was predictable, at least by some leaders like Senator Fernando Silva.
Even worse, it (the president’s veto) denies the possibility of fiscal and financial transparency, which shows the lack of vision of the state. Paraguay will continue to give its ENERGY to industry in Brazil and Argentina at a lower price than what Paraguayans would pay here.Fernando Silva, Senator
As long as the cryptocurrency law does not come into effect in Paraguay, clandestine cryptocurrency mining activities could continue. Moreover, the country will continue to lose significant tax revenue and the energy surplus to Brazil. But, there is hope: senators have overwhelmingly rejected the Head of State’s veto of the law allowing crypto mining. The controversial law is now on the table of the Paraguayan Chamber of Deputies. If the latter in turn overturns the President’s veto, the law will come into force. Let’s hope that Paraguay’s deputies will be as far-sighted as the senators.
I dream of a world where every citizen has total control over themselves, including their finances. I believe that Bitcoin is one of the tools that will achieve this revolution. Since 2019, I am learning about this cryptocurrency and spreading the word around.