Paraguay Lawmaker wants to Regulate Bitcoin Mining

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I hope you are all well and having excellent day, welcome to CryptoGod-1’s blog on all things crypto. In this post I will be looking at a new bill proposed in Paraguay to regulate Bitcoin mining.

Bitcoin Mining Regulation

A Paragyuan congresswoman by the name of Maria Constancia Benitez has proposed a new bill within the nation which would look to regulate the Bitcoin mining industry. The bill is considered pro-business as the South American nation looks to crackdown on their cryptocurrency regulations, with this being the fourth bill related to crypto regulation brought before Congress.

The bill specifically focuses on leveraging renewable energy for use in Bitcoin mining, and it reportedly “highlights the capacity of the Bitcoin mining industry to promote the economic and technological development of Paraguay.

With this being the fourth time a bill has been introduced towards regulating the sector, Benitez’s bill will need to pass the committee stage before her fellow lawmakers can vote on it.

Back in 2021 a private member’s bill targeting a digital asset strategy was introduced by Congressperson Carlitos Rejala and Senator Fernando Silva Facetti. The bill was also co-authored by mining firms and their lawyers and it got approval from both houses in 2022. However, the bill was ultimately vetoed by the President Mario Abdo Benitez on grounds that the high electricity consumption of the mining sector could hinder the expansion of a sustainable national industry. However, with this latest bill, it shows that Paraguay remain keen to regulate and turn the nation into a major Bitcoin mining player.

Maria Constancia Benitez

Within the draft bill Maria Constancia Benitez notes that Bitcoin mining can help “attract foreign investments and generate new jobs.” An extract from the bill reads as follows:

“It is of fundamental importance to legislate crypto mining, as it has the potential to attract foreign and domestic investments and boost employment. [Doing so will] position Paraguay as a modernized, technological hub in the [Latin American] region.”

The bill goes on to note that if the nation did regulate Bitcoin mining, it would help bring operators into “an environment of legal and economic security.” She went on to claim that this latter point was “essential for the sustained development” of the Bitcoin mining sector. This would potentially open up both direct and indirect jobs through the mining operations.

Paraguay is considered a crypto mining haven due to the nation’s abundance of hydroelectricity and this new proposal would help to ensure that the Bitcoin mining sector in Paraguay would comply with environmental regulations. She also believes that the mining sector could help to make Paraguay into a technological hub in the region.

The proposal highlights the need for transparency for businesses related to the crypto mining industry, with a key focus of the bill looking at mitigating electricity theft to fuel mining operations. Just last month an illicit mining farm with 2,738 crypto-mining units was seized in Salto del Guaira after the crackdown was initiated by the National Electricity Administration (ANDE). This came about once they noticed an unmetered connection in the area. Overall the illegal mining farm led to losses of 1.1 billion Guarani, approximately $146,000, for ANDE on a monthly basis.

The rise in illicit mining operations has resulted in losses for the state according to the congresswoman, and it also had a major impact on maintaining stability within the nation's power supply. Paraguay gets almost all of its power from hydroelectric power plants and houses some of the biggest names in the crypto mining sector. These dams sell miners surplus energy during rainy seasons due to the rapid water flows which generates more power than Paraguayan firms can typically make use of. 

Currently Marathon Digital and Bitfarms operate in the nation, with Tether also announcing plans to invest in mining facilities in the area. The bill also includes a provision for registration requirements for businesses related to cryptocurrency mining. Many data centres have already built facilities close to major dams.

Finally the bill also looks to impose anti-money laundering and counter-terrorism funding protocols on the Bitcoin and cryptocurrency mining industry. These will ensure Bitcoin miners follow strict regulations, but currently there is another proposal which was introduced to Congress back on the 3rd of April 2024 which would threaten to ban “the installation of crypto mining farms on Paraguayan territory.”

Have a great day.

CryptoGod-1.

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