Paraguay considers imposing a temporary ban on cryptocurrency mining

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Paraguay is considering implementing a temporary ban on cryptocurrency mining due to the strain caused by illegal mining operations on the power grid. The proposed ban, which would last for 180 days or until new laws are enacted, aims to address the issue of unauthorized crypto mining activities that are stealing electricity and disrupting the supply.

Introduced on April 4, the draft law seeks to prohibit the installation of crypto mining farms and activities related to the creation, conservation, storage, and commercialization of cryptocurrencies. It also aims to regulate crypto staking and wallet activities.

The ban would remain in effect until the National Electricity Administration (ANDE) can ensure that it can supply sufficient energy to crypto miners without negatively impacting other users of Paraguay’s electrical system.

The draft highlights the Alto Paraná region, located in the southeast bordering Brazil and Argentina, as a hotspot for crypto mining due to its proximity to the Itaipu hydroelectric dam, which supplies all of Paraguay’s domestic electricity needs. Since February, the region has experienced numerous cases of interrupted power supply attributed to illegal crypto mining operations.

ANDE estimates significant damages and losses caused by each illegal mining farm, with yearly losses in Alto Paraná potentially reaching up to $60 million. The draft argues that implementing crypto regulations would allow Paraguay to better supervise the industry and address issues such as consumer protections, money laundering, and tax evasion.

In 2022, Paraguay nearly passed a tax and legal framework for the crypto and mining sector, but it was vetoed by then-president Mario Abdo Benítez due to concerns about the high power consumption associated with mining activities and its impact on sustainable energy development.

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