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Proposed Legislation in Paraguay Could Pause Bitcoin Mining Operations

Proposed Legislation in Paraguay Could Pause Bitcoin Mining Operations

Apr 5, 2024
Bitcoin Mining

Proposed Legislation in Paraguay Could Pause Bitcoin Mining Operations

In a recent development from Paraguay, a group of 14 senators has put forth a proposal to institute a temporary ban on Bitcoin mining amid concerns over the nation's electricity supply stability. The proposal, presented on April 4, aims to suspend 'cryptocurrency creation, storage, and operation' activities for a period of 180 days or until proper regulations can be established.

The lawmakers have pinpointed the Bitcoin mining operations as a significant factor contributing to the disruption of Paraguay's power grid, especially in the Alto Paraná region, where the world's third-largest hydroelectric dam, Itaipu, is located. Since February, the area has experienced 50 instances of power outages attributed to illegal connections to the electric grid by mining operations.

The bill calls for a halt to "the creation, preservation, storage, and commercialization of virtual assets or crypto-assets, cryptocurrencies, and the installation of crypto-mining farms in Paraguayan territory." With soaring summer temperatures and a high demand for electricity, the government has linked the strain on the power grid to unauthorized Bitcoin mining farms consuming 'excessive amounts of energy.'

Violations of the proposed law would face sanctions as per regulations of the national financial system, the Central Bank of Paraguay, and the criminal offenses outlined in Law No. 1160/1997 "Penal Code," among other administrative penalties.

The future of the bill remains uncertain as local experts and miners mobilize against the proposed legislation, seeking a public hearing to discuss alternative regulatory measures. The community stresses the importance of a balanced approach that regulates energy-intensive mining while fostering the growth of energy-efficient mining.

As of now, the bill awaits further debate and consideration in Paraguay’s legislative process, with its ultimate fate yet to be determined.

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