KEY POINTS
- The bill proposes a temporary ban on the installation of new crypto mining farms
- Some experts have said raised concerns about the bill's potential to stall crypto innovation
- The government has said crypto mining activities contributed to outages across the country
The hot weather and alleged "undeclared" use of energy by some crypto miners has pushed Paraguay's power grid to the brink, and some lawmakers believe one way to resolve the issue to temporarily put brakes on the growth of the country's cryptocurrency mining sector.
In a new bill introduced this week, a group of Paraguayan senators proposed the temporary ban on "the creation, conservation, storage and marketing of virtual assets or crypto assets, cryptocurrencies and the installation of cryptomining farms in Paraguayan territory," as per a Google translation.
The bill particularly recommends a ban that lasts more than five months or until the country's National Electric Administration (ANDE) delivers an appropriate regulatory framework that ensures there is sufficient infrastructure to support the power-intensive needs of the crypto mining sector without risking the needs of other industries and the Paraguayan public.
However, there have been concerns about the bill's broad language, especially as it does not provide further clarifications regarding "storing" cryptocurrencies.
The proposed legislation further notes that violators may be sanctioned under regulations governing Paraguay's central bank and its national financial system. There are also other applicable administrative sanctions that violators may be faced with.
Some local experts and analysts have raised concerns about the bill's loopholes, with one saying on X (formerly Twitter) that the ban could cripple innovation in the sector. "Paraguay could miss out on progress in blockchain and crypto, rapidly growing global sectors," he said as per a Google translation.
Still, the bill's introduction comes at a critical time in Paraguay. Since February, there have been 50 cases of interrupted power supply in the country's Alto Paraná region associated with crypto miners. ANDE has also said one crypto mining farm causes losses of approximately $94,900. In the Alto Paraná region, specifically, losses reach up to $60 million annually, as per ANDE.
Just last month, the Paraguayan government's news agency said authorities seized over 1,000 "cryptocurrency processing machines" at a "large establishment dedicated to crypto mining" in the town of Quiindy. The seizure was carried out after "constant complaints of power outages" by Quiindy consumers.
Paraguayan government spokesperson Paula Carro has said that fires were causing outages across the country, but another cause is "the irregular and undeclared use of electrical energy in cryptomining activity." She said the said problem has contributed to overloading Paraguay's power grid.
