Paraguayan senators have halted progress on the proposed cryptocurrency mining ban introduced last week, with officials now considering the benefits of selling excess energy from its Itaipu hydropower plant to miners instead of exporting it to Brazil and Argentina.
A debate will be held in an April 23 public hearing to discuss the benefits and drawbacks of Bitcoin mining in the country, Senator Lilian Samaniego confirmed in an April 10 senate session.
It comes about a week after lawmakers introduced a draft law on April 4 to at least temporarily ban Bitcoin mining for 180 days, claiming illegal cryptocurrency mines have been stealing power and disrupting the country’s electricity supply.
However, days later, Paraguayan lawmakers approved a declaration to support local and foreign investment infrastructure four days later on April 8 — which Senator Salyn Buzarquis hopes will push the Paraguayan Ministry of Industry to study the economic advantages of selling excess energy to Bitcoin miners instead.
In an April 8 letter to Congress, Buzarquis noted the 45 licensed cryptocurrency miners are on track to generate $48 million for the National Electricity Administration (ANDE) by 2024 — with that figure expected to reach $125 million by 2025 after miners install more equipment.
With the cost of electricity production at Paraguay’s Itaipu’s hydropower plant hovering around the $22 per megawatt-hour (MWh) range, ANDE could generate a 45% net profit margin by selling off excess energy to local Bitcoin miners at $40/MWh.
This equates to $73 million annually and about $17 million in value added tax for the treasury, noted Buzarquis, who went on to claim that Bitcoin mining operations could even save ANDE from filing for bankruptcy.
“This flow of funds is what is going to save ANDE from going bankrupt; to be able to invest more in infrastructure and not to raise the rate for Paraguyans.”
Paraguay currently sells energy to Brazil at a subsidized $10/ MWh rate, Buzarquis noted.
Cryptocurrency mining could also generate more employment opportunities for the local economy, Buzarquis added in the April 10 senate session.
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The earlier April 4 bill, lawmakers argued that there have been 50 cases of interrupted power supply linked to cryptocurrency miners illegally tapping into these electricity sources since February.
If passed, it could impact one of the largest industry players, Marathon Digital Holdings, which expanded into Paraguay last November, deploying 27 megawatts around the Itaipu hydroelectric power plant.
The controversy in Paraguay comes as Bitcoin miners prepare for the upcoming Bitcoin halving event expected to take place on April 20, which will slice miner rewards from 6.25 BTC ($442,000) to 3.125 BTC ($221,000).
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