In the quest to address illegal mining, the Paraguayan policymakers have reversed the decision to restrict crypto-related activities. A few days ago, the Paraguayan policymakers proposed a bill to suspend crypto mining for 180 days to address power concerns.
Based on the benefits offered by crypto mining, the Paraguayan senator agreed not to implement the proposed bill. Instead of restricting crypto mining activities in the region, the Senator plans to trade the excess energy generated at the Itaipu hydro plant with potential miners.
Paraguay Reconsider Crypto Mining Ban
Initially, the Paraguayan government exported the excess energy to neighboring countries, including Brazil and Argentina. Pro-crypto senator Salyn Buzarquis presented a bill outlining the economic benefits of selling the excess power to local crypto miners.
Senator Buzarquis urged the Paraguayan Ministry of Industry to extensively study the benefits of trading the excess power to miners.Before then, the Paraguayan senators held intense discussions to assess the benefits and drawbacks of crypto mining. During the meeting, the Senator realized the benefits of crypto mining outweigh the disadvantages.
To tap into the economic benefits of crypto mining, lawmakers issued a final nod to support local and foreign investment in Paraguay. Addressing the senate, Senator Buzarquis underlined that crypto mining could create more local job opportunities.
Despite the numerous benefits of crypto mining, the senators noted that some miners stole energy to mine digital assets.
The senators lamented that illegal connectivities to the national power grid impacted energy shortages amid the sizzling summer season. He noted that around 50 power interruption cases caused crypto miners have been reported to the local authority.
Citing the report provided by the National Electricity Administration (ANDE), the lawmakers regretted that energy produced on the national grid was insufficient for household and industrial use.
Economic Advantage of Crypto Mining in Paraguay
The inadequate supply of electricity obliged the local regulators to take strategic actions to assess the compliance of the crypto miners. Senator Buzarquis noted that around 45 crypto miners were licensed to operate in Paraguay.
The executive argued that if the Paraguayan authority sold excess energy, the licensed crypto miners could generate $48 million for ANDE by the end of the year. The pro-crypto senators anticipate that miners will install more mining machinery to maximize production.
He estimates that 2025, the miners will generate over $125 million to the government. Reflecting on the power production rates at the Itaipu hydropower plant, Senator Buzarquis observed that the cost of power produced at the station amounted to $22 per megawatt-hour (MWh).
The Senator projects ANDE yields a 45% net profit margin if it sells excess energy at $40/MWh to local miners. It implies that ANDE will generate $73 million annually from the sale of excess energy.
Senator Buzarquis estimated ANDE to yield an extra $17 million in value-added tax from crypto miners. He emphasized the need to sell excess energy to the miners to prevent ANDE from going bankrupt.
In her projection, Senator Buzarquis believes that ANDE will generate extra revenue from crypto miners, which will play a significant role in improving the essential infrastructure in Paraguay.
Paraguayan Lawmaker Push For Friendly Crypto Regulations
Also, the revenue generated from the sale of excess energy will be used to maintain Paraguay’s standard electricity rates. The legislator argued that selling the excess energy would prevent businesses from fleeing the Paraguay market.
Currently, the authority sells energy at a subsidized rate of $10/MWh to the Brazilian government. Senator Buzarquis urged lawmakers to support the bill to sell excess power to local miners.
He envisioned that the implementation of the new bill would improve the attractiveness of the Paraguay crypto industry. Senator Buzarquis expressed optimism that the new bill will attract key market players such as Marathon Digital Holdings to expand its operation in Paraguay.
In November last year, Marathon entered the vibrant Paraguayan crypto market and installed a 27 megawatt facility neighboring Itaipu hydropower plant. He argues that the new bill will allow the miners to prepare for the 2024 Bitcoin halving schedule this month.
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