Paraguay, a South American country, was looking forward to regulating the crypto mining sector, but following a series of events, it has come to a halt.
The country’s crypto law has been through a chain of affairs and recently came to an end by the verdict of the lawmakers. The bill, which was under scrutiny for months, was set to create a tax and regulatory framework for crypto mining in the country; however, it was suspended by the politicians.
Earlier in July, the Paraguayan legislature adopted the plan to establish a clear tax and regulatory framework that would enable miners to understand their status while operating in the nation. However, the bill was vetoed by President Mario Abdo Benitez on the grounds that the activity consumes a lot of electricity and generates very little employment.
In October, 33 Paraguayan senators voted to overturn the President’s veto of the bill that would have regulated Bitcoin mining in the country. The rejection of the President’s veto by the lawmakers implied that the senators wanted to regulate the industry, which otherwise was operating in the legal gray area.
Surprisingly, Paraguay’s Chamber of Deputies, i.e., the lower house of the parliament, voted against the bill, thus putting it in the archives.
The proposed legislation was drafted in 2021 by Congressman Carlos Rejala and Senator Fernando Silva Facetti. Its main aim was to put a cap on electricity rates consumed for mining operations and tax the industry.
Paraguay has been an attractive spot for Bitcoin miners, given its low electricity rates, as the mining operations need huge amounts of electricity to keep running.
Interestingly, despite the lawmakers suspending the bill, the country’s blockchain advocacy group has expressed their satisfaction with the verdict.
Luiz Benitez, secretary of the blockchain association of Paraguay, opined that the organization is content with the recent announcement and counts it as a smart move. He said that he’s relieved to see the lawmakers accepting the veto and quotes it as “finally sanity prevailed.”
“From the Blockchain Association of Paraguay, we were pleasantly surprised by the acceptance of the veto.”
However, he added that the crypto community in the country is looking forward to educating and spreading awareness amongst the legislators regarding the industry. They wish the legislators to have a better idea of the industry and its mechanism to form a comprehensive draft of the regulatory bill.
Paraguay’s availability of energy and lower rates also invited foreign attention from various big companies to set up establishments and shops. In 2021, Bitfarms, a Canadian mining giant firm, announced its expansion in the country on a five-year lease with an annual renewable power purchase agreement to secure 10 MW of green hydropower.
However, Paraguayan authorities have been concerned with the increasing mining. According to the National Power Administration, the increasing Bitcoin mining in the country might affect the stability of the national power system in the country. The problem of illegal mining is also causing troubles to the system as the illegal miners continue to consume high amounts of power without making payments.
In November, ANDE, the country’s national power administration flagged illegal mining operations in Alto Parana. They alleged that mining activities had grown immensely and are putting a load on the state’s power grid . Miguel Angel Baez, director of ANDE, had suggested increasing the vigilance of the zone and increasing supervision of operations to detect such illicit operations on the borders with Brazil.