Shift from Proposed Ban to Potential Energy Sales
In a significant shift from a potential blanket ban on Bitcoin mining, Paraguayan legislators are now contemplating the sale of excess energy from the Itaipu hydropower plant to cryptocurrency miners. This consideration comes in the wake of discussions about the drawbacks of exporting surplus electricity to neighboring countries, Brazil and Argentina. The proposed ban, introduced on April 4, aimed to halt Bitcoin mining for 180 days due to concerns over illegal operations stealing power and disrupting electricity supply.
Upcoming Public Debate and Legislative Actions
Senator Lilian Samaniego announced that a public hearing scheduled for April 23 will explore the pros and cons of Bitcoin mining in Paraguay. This announcement followed a recent pause in the legislative progress on the proposed mining ban. Furthermore, just days after the initial proposal, Paraguayan lawmakers passed a declaration on April 8 to support local and foreign investment infrastructure, which encourages the Ministry of Industry to assess the economic benefits of directing excess energy to Bitcoin mining activities.
Economic Implications of Selling Excess Energy
In a letter to Congress dated April 8, Senator Salyn Buzarquis highlighted the potential financial benefits of this shift. He noted that 45 licensed cryptocurrency miners are projected to generate $48 million for the National Electricity Administration (ANDE) by 2024, with expectations to reach $125 million by 2025 as mining operations expand. Selling electricity at $40 per megawatt-hour (MWh) from Itaipu, where production costs are around $22 per MWh, could net ANDE a 45% profit margin. This arrangement could bring in approximately $73 million annually, plus an additional $17 million in value-added tax for the treasury.
Buzarquis emphasized the significant financial relief this could provide for ANDE, potentially preventing bankruptcy and allowing for further investment in infrastructure without raising rates for Paraguayans. Currently, Paraguay sells energy to Brazil at a subsidized rate of $10 per MWh.
Broader Implications for the Local Economy
The shift towards utilizing excess energy for Bitcoin mining not only promises substantial economic returns but also poses potential benefits for local employment. The legislative reconsideration of Bitcoin mining operations comes at a critical time as the industry braces for the Bitcoin halving event on April 20, which will reduce mining rewards significantly. This backdrop of legislative developments and economic considerations paints a complex picture of cryptocurrency's role in Paraguay's future energy and economic policies.
Notice:
,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“
