In a significant shift, Paraguay is reevaluating its stance on a comprehensive ban on Bitcoin mining, opting instead to explore the potential of selling surplus energy to cryptocurrency miners. This pivot comes after initial proposals for a temporary halt on mining activities sparked debates about the sector’s impact on the country’s energy resources and economy.
From Ban to Boom: A New Proposal on the Table
The conversation took a turn when Paraguayan senators, reconsidering the earlier proposed ban introduced on April 4, suggested leveraging the excess energy produced by the Itaipu hydropower plant. Rather than exporting this energy at subsidized rates to neighboring countries like Brazil and Argentina, officials are now contemplating its sale to Bitcoin mining operations.
Economic Advantages Over Environmental Concerns
Senator Lilian Samaniego announced an upcoming public hearing on April 23 to deliberate the pros and cons of allowing Bitcoin mining in Paraguay. This reevaluation stems from concerns over illegal mining operations siphoning electricity and the recognition of the economic benefits legitimate mining could bring. Senator Salyn Buzarquis highlighted that licensed miners could significantly boost the National Electricity Administration’s (ANDE) revenue, with projections showing potential earnings of $48 million by 2024, and escalating to $125 million by 2025 as miners scale up their operations.
The Financial Rationale Behind the Shift
With the cost of producing electricity at Itaipu estimated at $22 per megawatt-hour (MWh), selling excess energy to Bitcoin miners at $40/MWh could yield a 45% net profit margin for ANDE. This strategy could not only prevent ANDE from potential bankruptcy by infusing approximately $73 million annually into its coffers but also contribute an additional $17 million in value-added tax to the treasury.
Employment and Industry Impacts
The proposed shift towards supporting cryptocurrency mining reflects a broader understanding of its potential to generate employment and foster economic growth within Paraguay. The move could particularly benefit major industry players like Marathon Digital Holdings, which recently expanded its operations in Paraguay, deploying significant mining infrastructure around the Itaipu plant.
Looking Ahead: The Bitcoin Halving Context
This development arrives as the Bitcoin community braces for the upcoming halving event on April 20, which will reduce mining rewards by half, from 6.25 to 3.125 BTC. The outcome of Paraguay’s deliberations could have profound implications for the local and global Bitcoin mining landscape, highlighting the need for a balanced approach that considers both economic opportunities and energy sustainability.
