Paraguay is currently considering implementing stricter regulations for bitcoin mining within the country. Despite initial excitement from the bitcoin community due to the country’s low electricity costs, the government is now looking for ways to better control this activity. The proposal, introduced on April 3 by the senatorial chamber at the National Congress, includes a temporary ban on bitcoin mining and prohibits the storage and trading of cryptocurrencies.
One of the main reasons for discussing this law is the presence of numerous illegal bitcoin mining operations within the country. The ban is set to last at least six months and is intended to protect consumers from the risks associated with virtual assets. Before it can be enacted, the bill must pass through three additional levels of Congress.
Joaquin Morinigo, a Paraguayan bitcoin analyst, explains that the proposed law would directly impact the 50 legally operating mining companies, as well as all cryptocurrency users in the country. He notes that Paraguay is a highly attractive location for bitcoin miners due to its almost 100% hydroelectric energy production, with two major hydroelectric dams operating in partnership with Brazil and Argentina. These renewable energy sources not only provide cheap electricity for miners but also appeal to investors interested in environmentally friendly industries.
However, if the new law is passed, it could jeopardize this potential and affect all cryptocurrency users in the country. Morinigo argues that the proposal is a threat to the development of the cryptocurrency ecosystem in Paraguay and a violation of individual freedoms.
This is not the first time the Paraguayan Congress has attempted to regulate crypto-related activities. In 2022, a similar proposal was rejected after failing to obtain enough votes to overturn the veto from President Mario Abdo Benítez. The proposed law at that time aimed to regulate bitcoin mining as a commodity-based industry.
It remains to be seen if this new proposal will meet the same fate. However, it highlights the ongoing concerns of policymakers in Paraguay regarding bitcoin mining and cryptocurrencies under the new administration of President Santiago Peña.
