The Paraguayan Congress is poised to vote on a new bill aimed at regulating Bitcoin (BTC) mining, even as the country continues its crackdown on illegal mining operations.
The bill, introduced by lawmaker María Constancia Benítez, is seen as pro-business. According to the Spanish-language media outlet Criptonoticias, the legislation emphasizes the potential of the Bitcoin mining industry to foster economic and technological growth in Paraguay.
Will Paraguay Finally Regulate Bitcoin Mining?
Benítez's bill must first pass the committee stage before it can be put to a vote in Congress. This marks the fourth attempt by Paraguayan parliamentarians to regulate the sector. A 2022 private member’s bill, co-authored by mining firms and their lawyers, had previously passed both houses but was vetoed by the President.
Despite past setbacks, the new bill underscores lawmakers' continued interest in positioning Paraguay as a key player in the BTC mining industry. Benítez’s draft law highlights the potential benefits of Bitcoin mining, including attracting foreign investments and generating new jobs. The bill states:
"It is of fundamental importance to legislate crypto mining, as it has the potential to attract foreign and domestic investments and boost employment. [Doing so will] position Paraguay as a modernized, technological hub in the [Latin American] region."
The bill further argues that regulating Bitcoin mining would bring operators into "an environment of legal and economic security," which Benítez claims is essential for the sustained development of the BTC mining sector.
Bill Proposes AML, CFT Measures
The proposed legislation includes measures to enforce anti-money laundering (AML) and counter-terrorism financing (CFT) protocols within the industry. It also calls for strict adherence to environmental regulations, ensuring that BTC miners use environmentally friendly, renewables-heavy energy mixes. This aspect should be an easy sell, as Paraguay derives nearly all of its power from hydroelectric plants. This renewable energy source has already attracted global mining firms, which have established data centers near major dams. These dams sell surplus energy to miners during rainy seasons when water flows generate excess power that Paraguayan firms cannot fully utilize.
Potential Opposition
Despite its pro-business stance, the bill is likely to face opposition. Power companies have blamed illegal crypto mining for network disruptions, with many miners illegally connecting their rigs to local grids. This has led to a police crackdown, with around 3,000 Bitcoin ASIC miners recently seized in a bust targeting illegal operations.
As the bill moves through the legislative process, its success will hinge on balancing the benefits of a regulated mining industry with the need to address concerns from power companies and enforce legal standards.
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Hive Digital is expanding its operations to Paraguay for the first time. The Bitcoin miner has big plans to build a 100-megawatt mining facility in Paraguay, powered by the nation’s Itaipu hydroelectric dam. This expansion is expected to more than double its mining hashrate, showing huge potential for growth in the region. The energy for this facility will be sourced from the hydroelectric dam, providing not only sustainable power but also economic opportunities for the region.
However, there are some challenges on the horizon as Paraguay plans to increase electricity costs for legal cryptocurrency miners. Despite this, Hive Digital remains confident in the venture and aims to generate over $100 million for the country's electricity grid operator over the next three years. By hiring local employees, the company is committed to fostering economic growth and innovation in Paraguay.
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