Paraguay's senators have introduced a bill that would ban the creation, storage, custody, and commercialization of virtual assets, as well as the establishment of virtual currency mining farms.
On April 3, 14 senators submitted a proposal in the Paraguayan Senate, including Corim Gregorio Soroka, Ever Federico, and Regina Lizarella.
Paraguayan senators want to ban crypto mining
The senators claimed that cryptocurrency miners are “exploiting” the country's hydroelectric energy and concentrating their activities in Alto Paraná.
“in [Alto Paraná]more than 50 facilities dedicated to crypto assets have been discovered by February 2024,” the senators said in a translated version of their proposal.
Read more: Will crypto mining be profitable in 2024?
These incidents harmed the National Electricity Authority (ANDE). ANDE's losses amount to 700 million yen per month. This is equivalent to 420 billion guarani, or approximately $60 million, annually.
The effort claims “secret connections” in cryptocurrency mining farms. They highlighted that this activity steals 28% of energy consumption through irregular connections in mining farms.
Moreover, the senators have no regard for consumer protection, crime prevention, market stability, transparency, accountability, or energy security. The initiative therefore prohibits cryptocurrency mining until regulators establish rules for the activity.
Senators are proposing legal regulation of cryptocurrency mining that integrates legal, financial, and security implications. This includes establishing a clear framework on energy consumption and prices, ensuring equity in access to energy and electricity infrastructure, and improving environmental impact.
The measure will take effect after approval, but control has been transferred to the Justice and Labor Legislation Committee.
The lack of clearly defined regulation raises serious concerns, as exemplified by ANDE's recent actions. On April 4, ANDE intervened at a cryptocurrency mining facility in Ciudad del Este, Alto Paraná state, where “irregular connections” were discovered. ANDE's actions have been described as a direct response to illegal activity.
Read more: Bitcoin mining from home: Will it be possible in 2024?
This simple installation results in a monthly loss of 58 million Guarani and is punishable by up to three years in prison.
Despite regulations, Paraguay is an oasis for cryptocurrency mining. BeInCrypto reported that the famous Itaipu Dam on the Paraná River generates a staggering 14 gigawatts (GW) of electrical energy. This represents more than 99% of the country's energy supply.
Furthermore, surplus energy is the biggest attraction for Bitcoin miners. They think Paraguay is a good place to establish their business.
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