Paraguay banning bitcoin mining might cost Paraguay $200 million per year.
In April, legislators in Paraguay presented a bill that proposed a temporary ban on the mining of Bitcoin and other cryptocurrencies within the country.
If the measure is approved, it will result in enormous losses for the economy of the country.
A month ago, Paraguay began debating the possibility of imposing more stringent controls on the mining of Bitcoin and other cryptocurrencies within the country.
Forbes reports that the government of Paraguay, which had previously lured cryptocurrency miners with its low electricity prices, is now attempting to regulate this activity. This is a decision that was made by the government.
The proposal, which was presented to the National Congress by the senatorial chamber on April 3, argues that there should be a temporary ban on the mining of Bitcoins within the country.
The reports indicate that the draft law intends to restrict the trading of cryptocurrency as well as the storage of cryptocurrency.
In response to concerns over the following issues, this proposal has been developed:
An increase in the number of unlawful mining activities that steal electricity and cause disruptions to the national power system is referred to as “illegal mining.”
Energy Consumption: The mining of Bitcoin places a significant strain on Paraguay’s resources due to the huge amount of energy that is required.
The proposed legislation proposes to prohibit the installation and operation of cryptocurrency mining facilities for a period of one hundred eighty days. There is the possibility that this could be prolonged until new regulations are enacted and the national electricity grid can deal with the added load.
Crypto Mining and Bitcoin’s Possible Impact of Paraguai Banning Bitcoin
In a recent interview with Forbes, Joaquin Morinigo, a Bitcoin analyst from Paraguay, highlighted the potential impact of the proposed bill on the operations of 50 mining companies. These companies, which have contracts with the National Energy Administration, range in contract size from 6 MW to 100 MW.
The analyst further highlighted the significant implications of this measure on all crypto users in Paraguay, as it would effectively ban crypto trading and storage.
If the bill passes, the Paraguayan economy stands to lose more than $200 million annually. As of today, April 8th, 2024, the bill is still being reviewed. It remains uncertain whether it will be passed or amended. According to Jaran Mellerud, co-founder and chief mining strategist at Hashlabs Mining, Bitcoin mining has a noteworthy impact on Paraguay’s trade balance. Bitcoin mining firms in Paraguay are required to register and obtain authorization from the Paraguayan Ministry of Industry and Commerce. If the bill is approved, it is said to have potential consequences for Marathon Digital Holdings, a major player in the industry. Marathon Digital Holdings began deploying 27 megawatts near the Itaipu hydroelectric power plant in November of last year.
The Itaipu Dam has become a favoured location for miners to establish themselves, and it currently provides all of the electricity needed in Paraguay.
The contentious decision regarding Bitcoin and crypto mining in the country coincides with the upcoming Bitcoin halving event set to occur on April 20. The event will reduce miner rewards from 6.25 BTC to 3.125 BTC.
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