Paraguay’s national electricity authority has warned that a bitcoin mining boom in the eastern department of Alto Paraná could “jeopardize” national power stability, the Rio Times reports.
Engineer Miguel Ángel Baéz, technical director of the country’s National Electricity Administration (ANDE) explained that despite crack downs by authorities, illegal bitcoin mining operations keep popping up.
“While they disrupt one connection, two others connect,” he said.
The Alto Paraná Department lies in the east of Paraguay, sharing a border with Brazil and Argentina. The region is home to the single source of electricity for domestic consumption in the country: the Itaipu hydroelectric dam.
However, a single mining operation can use up “all the energy” of a generator meant for an apartment complex, Baéz explained.
Paraguay president vetoes bitcoin mining regulation bill
Paraguay has become an attractive destination for major foreign bitcoin miners due to low energy costs. The government approved a bill to outline a tax and regulatory framework for bitcoin mining in July. President Mario Abdo Benítez decided to veto it on the grounds that it uses too much energy and doesn’t create enough jobs.
“Fixed mining of virtual assets requires the use of intensive and massive electrical energy and great capacity of energy production, which the country has,” a presidential statement read. “Nevertheless, it does not generate a lot of labor like any other sector industry.”
If approved, the bill would have increased electricty costs for bitcoin miners by 15%. 33 senators voted to reject President Benítez’s veto at the end of September.
The bitcoin mining industry is currently in distress — miners sold more bitcoin than they mined, resulting in huge losses this summer. Bitcoin’s price plummet and rising energy prices have exacerbated the financial burdens.
Public bitcoin mining giants Hive and Bitfarms are down 75% and 80% year-to-date, respectively. The latter signed a five-year deal in late 2021 to build a 3,000-strong bitcoin mining farm in Paraguay at low energy costs.