Bittime - The discourse on banning crypto mining in Paraguay is becoming a hot topic of discussion. Paraguay's Congress recently proposed a bill aimed at banning crypto mining activities. The reason given is the rise of illegal mining which steals electricity and disrupts the national electricity supply.
Financial Loss for Paraguay?
If passed, the ban will be in effect for 180 days or until the new law is implemented and the national electricity grid operator can ensure sufficient energy supply. However, legal miners are worried that this ban will actually harm Paraguay financially.
Jaran Mellerud, co-founder of Hashlabs Mining, a Bitcoin mining company, estimates the ban could cost Paraguay more than $200 million a year.
According to Mellerud, Bitcoin mining activities have made a positive contribution to Paraguay's trade balance. Bitcoin mining companies are currently required to register and obtain permits from the Paraguayan Ministry of Industry and Trade.
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Impact on Large Crypto Mining Companies
One of the large crypto mining companies that could potentially be affected by this ban is Marathon Digital Holdings. The company is known to have started using 27 megawatts of electricity around the Itaipu hydroelectric power plant since last November.
Electricity Theft and Supply Disruption
Paraguayan legislators argued that they needed to take firm action because there had been 50 cases of electricity supply disruptions linked to illegal crypto miners stealing electricity since last February.
Paraguay's National Electricity Administration estimates each illegal crypto mining operation could cause losses of up to $94,900 and total annual losses in the Alto Paraná region (site of the Itaipu Power Plant) could reach $60 million.
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Following Kazakhstan's Steps?
Mellerud acknowledged that illegal mining operations could damage the power grid if they use too much electricity from low-voltage lines. A similar situation occurred in Kazakhstan several years ago, which ultimately prompted the Kazakh government to crack down on the crypto mining industry and expel illegal miners from the country.
Also Read: What is Cryptocurrency Mining?
The Future of Crypto Mining in Paraguay
The controversy regarding the ban on crypto mining in Paraguay arises at a time when Bitcoin miners are preparing for the Bitcoin halving event which is expected to occur on April 20. The halving event will reduce the reward Bitcoin miners receive from 6.25 Bitcoins to 3.125 Bitcoins.
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Conclusion
Plans to ban crypto mining in Paraguay spark debate. Legislators are focused on eradicating illegal mining which is detrimental to the country. However, on the other hand, it is feared that the ban will have a negative impact on legal mining companies and could potentially cause financial losses for Paraguay. Attention is also focused on the continuation of this ban discourse and how Paraguay will overcome the problem of illegal crypto mining.
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Utility Mining in Cryptocurrencies
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DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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