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Bitcoin miners could threaten Paraguay’s power stability

Bitcoin miners could threaten Paraguay’s power stability

Paraguay’s National Electricity Authority has warned that a bitcoin mining boom in the eastern department of Alto Paraná could “threaten” national energy stability, the Rio Times reports. Engineer Miguel Ángel Baéz, technical director of the country’s National Electricity Agency (ANDE), explained that despite the authorities’ crackdown, illegal bitcoin mining operations continue to emerge. “When they break one connection, two others connect,” he said. The department of Alto Paraná is in eastern Paraguay and borders Brazil and Argentina. The region is home to the country’s only source of electricity for self-consumption: The Itaipu Dam.

However, a single mining operation can consume “all the power” of a generator dedicated to a residential complex, Báez explained.

Paraguay president vetoes bitcoin mining regulation bill

Due to low energy costs, Paraguay has become an attractive destination for large foreign bitcoin miners. In July, the government passed a bill to outline a tax and regulatory framework for bitcoin mining. President Mario Abdo Benítez vetoed it because it uses too much energy and creates too few jobs. “The solid mining of virtual assets requires the intensive and massive use of electric power and a large power generation capacity that the country possesses,” the president said in a 1 statement. “However, it does not generate much manual labour like any other industry.

The law would have increased electricity costs for bitcoin miners by 15%. At the end of September, 33 senators voted to override President Benítez’s veto, resulting in huge losses that summer. Bitcoin’s price drop and energy price spike have compounded financial stress.

Public bitcoin mining giants Hive and Bitfarms are down 75% and 80%, respectively, year-to-date. The latter signed a five-year deal in late 2021 to build a 3,000-person, low-energy Bitcoin mining farm in Paraguay Costs.

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