Lawmakers in Paraguay have proposed a bill to impose a temporary ban on crypto mining and related activities in response to concerns about illegal mining operations draining power and disrupting the electricity supply.
Introduced on April 4, the draft law seeks to prohibit the installation of crypto mining farms and activities related to the creation, conservation, storage, and commercialization of cryptocurrencies.
The ban’s duration is set for 180 days or until a comprehensive law is enacted, and the National Electricity Administration (ANDE) ensures sufficient energy supply to crypto miners without impacting other users of the electrical system.
The draft aims to regulate crypto staking (creation of new crypto assets) and wallets (conservation and storage of crypto assets).
Paraguay has witnessed a significant influx of crypto miners, attracted by abundant hydroelectric energy, particularly in the Alto Paraná region bordering Brazil and Argentina.
The draft cites 50 instances of power supply interruptions since February, attributed to clandestine and illegal connections by crypto miners to the grid, causing estimated damages and losses of up to $94,900 per mining farm and annual losses in the region reaching $60 million.
Concerns over the lack of crypto regulations in Paraguay include consumer protection issues, potential for money laundering, and tax evasion, necessitating better supervision of the industry.
In 2022, Paraguay neared the adoption of a tax and legal framework for the crypto and mining sector, but the initiative was vetoed by then-president Mario Abdo Benítez due to concerns about the high energy consumption of mining operations hindering the development of sustainable energy systems.
The proposed ban on crypto mining in Paraguay reflects concerns about its impact on the country’s power supply and the need for regulatory oversight to address associated risks. It underscores the ongoing debate over balancing the benefits of crypto mining with the challenges it poses to energy infrastructure and regulatory frameworks.
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