Lawmakers in Paraguay have put forward a bill proposing a temporary prohibition on cryptocurrency mining and associated activities within the country. The legislation, introduced on April 4, aims to address concerns about illegal cryptocurrency mining operations, which have been accused of illicitly siphoning electricity and disrupting power supplies.
Under the proposed draft law, the installation of cryptocurrency mining farms would be prohibited, along with activities related to the creation, storage, and trading of cryptocurrencies. The bill's language suggests a broad approach to regulation, encompassing aspects such as cryptocurrency staking and wallet management.
The ban is slated to last for 180 days, approximately six months, or until comprehensive legislation is enacted. It also hinges on assurances from the National Electricity Administration (ANDE) that sufficient energy can be provided to cryptocurrency miners without jeopardizing the stability of Paraguay's electricity grid or affecting other users.
The draft legislation underscores the surge in cryptocurrency mining activities in Paraguay, particularly in the Alto Paraná region bordering Brazil and Argentina. This area, home to the Itaipu Dam, has seen a significant influx of crypto miners drawn by the abundant hydroelectric power supply.
Reports indicate that clandestine connections to the grid by crypto miners have led to numerous power outages in the region since February. ANDE estimates substantial financial losses associated with these disruptions, with each illicit mining operation potentially costing up to $94,900 and annual losses in the Alto Paraná state reaching as high as $60 million.
The bill emphasizes the need for cryptocurrency regulations to ensure better oversight of the industry, citing concerns about consumer protection, money laundering, and tax evasion. While Paraguay previously made strides toward establishing a legal framework for cryptocurrencies and mining in 2022, efforts were halted by concerns over the industry's energy consumption and its impact on sustainable energy initiatives.
