Bitcoin Bill Rejected by Paraguay’s President – Here’s Why

The Bitcoin utopia dream of this part of the globe may be in danger.

Recent years have witnessed a regulatory boom for cryptocurrencies in South America. This was consistent with the rather optimistic attitude towards crypto held by several nations in the region.

However, on Monday, Paraguay’s president thumbed down a law that would have authorized the government to regulate and tax crypto mining.

What the Bitcoin bill could have brought to the table

The measure recognizes cryptomining as a fundamental aspect of the Paraguayan economy. If the law was not vetoed, the government could support the business; support that would ultimately provide bitcoin miners and everyone who uses and trades the digital currency with security.

This legislation could also have eased unemployment in Paraguay. The nation is undergoing a population explosion.

Around 60 percent of the total population in Paraguay is between the ages of 15 and 64, according to figures from the authorities.

This led to a significant proportion of the population being of working age. This population growth and growing workforce represent unrealized potential for Paraguay.

With a national unemployment rate of 6.8%, it is necessary to address the existing labor shortage.

The question of power consumption

The right of veto was justified by the energy consumption of cryptocurrency mining. Huge amounts of energy are consumed by the bitcoin network as a whole, 220 terawatts to be precise. This amounts to around 0.14 per cent of global energy production.

However, mining is a different scenario. The current complexity is currently 30.98 trillion. Combined with the high energy consumption per ASIC, this can result in higher energy consumption than desired. This is represented in Bitfarms’ lease for 10 megawatts of hydropower.

Mario Abdo Benitez, President of Paraguay. Image: Arutz Sheva

The President of Paraguay, Mario Abdo Benitez, stated in the order:

“Fixed mining of virtual assets necessitates the use of intense and enormous electrical energy, as well as a large capacity for energy production, which the country possesses.”

In fact, miners will be required to pay extra for electricity under the proposed bitcoin law. In contrast, the measure only specifies that their wages will increase by 15% compared to the current rate in other sectors.

Unsurprisingly, the rejection of the bitcoin bill was met with some resistance. The bill’s proposer, Senator Silva Facetti, has spoken out against the government’s decision.

Facetti made the following statement:

“The day-to-day management does not recognize mining as a business that provides resources and employment opportunities, but works in a murky area without access to the financial system or regulations that protect the investor, the consumer and the government.”

Paraguay’s crypto community stands to gain significantly if the country overturns the veto.

BTC total market cap at $385 billion on the daily chart | Source: TradingView.com

Featured image from Adobe Stock Photo, chart from TradingView.com