May 29, 2024

The expert calculated Paraguay’s losses from the ban on mining.

Paraguay-min
Paraguay-min

The economy of Paraguay could lose more than $200 million in annual revenues if the proposed mining ban bill is adopted. Hashlabs Mining co-founder Jaran Mellerud told Cointelegraph about this.

In April, a group of senators introduced a document in Congress that envisages a 180-day moratorium on cryptocurrency mining activities and other related operations. The ban could be extended until comprehensive regulation of digital assets is adopted and until the operator of the national energy system (ANDE) can guarantee the stable operation of the infrastructure.

According to politicians, illegal mining farms steal electricity and disrupt the population’s supply.

However, restrictions on the operation of registered cryptocurrency mining companies could be costly for the country, Mellerud believes.

“A bitcoin mining ban could cost Paraguay over $200 million a year, assuming there are 500 MW of legal miners in the country, paying $0.05 per kWh as operating costs,” he said.

The GDP per capita in the country is $5843 – 104th in the world and significantly lower than neighboring countries like Brazil ($10,413) or Argentina ($13,297). The total indicator of the small Latin American country (6.8 million population) barely exceeds $44 billion.

According to Mellerud, the mining industry currently makes a “significant, positive contribution to Paraguay’s trade balance.”

The area around the Itaipu dam has become a popular location for cryptocurrency mining facilities. The second most powerful hydroelectric plant in the world meets the country’s needs entirely. Historically, the excess electricity produced was exported to Brazil at low prices. Miners buy it at higher rates, the expert noted.

However, legislators claim that as of February, there have been 50 cases of power outages caused by cryptocurrency mining. According to ANDE’s estimate, on average, each illegal mining farm causes about $95,000 in damage per month, with annual losses potentially reaching around $60 million.

“Illegal operations can damage the energy system if they consume too much electricity from low-voltage lines,” Mellerud admitted.

Reminder: In 2023, experts at Hashrate Index, evaluating the development and prospects of bitcoin mining in Paraguay, concluded that the country is becoming an important global center of the industry.

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