Paraguay Krypto bill removed by lawmakers, no cheap Bitcoin mining
ONE Paraguay’s crypto bill focused on taxation and crypto mining have been advanced by legislators. The bill would have established electricity cost caps for mining.
Crypto miners will no longer find Paraguay a haven for mining after lawmakers backtracked on a crypto law. The country was supposed to adopt crypto regulations, but decided against it on December 5 after a long period of deliberation.
The bill would have created both a tax scheme and a regulatory framework for the asset class.
The main impact of the backtracking is the fact that miners will not be able to exploit the country’s cheap energy. Paraguayan President Mario Abdo Benitez had previously said that bitcoin used too much energy and that the asset was not economically beneficial enough. The bill was originally passed earlier this year.
Paraguay’s lower house of parliament, the Chamber of Deputies, shelved the bill on Monday, despite overruling the president’s veto. The bill managed to obtain 36 votes, five short of the 41 needed for it to be passed.
The bill would have taxed the industry and offered a cap on electricity costs for miners. As such, it would be very attractive to bitcoin miners.
Paraguay remains a hotbed for bitcoin mining due to its cheap energy and hydropower infrastructure. For example, Bitfarms has a presence in the country, having established a five-year lease to obtain 10MW of power.
Another reason for the bill’s rejection is that lawmakers don’t believe the infrastructure can handle the load. Local grid operator Ande is also opposed to the bill and has asked the government to increase miners’ tariffs by 60%.
Cheap energy important for miners
Cheap energy has always been attractive to bitcoin miners, whose energy needs have attracted worldwide attention. Countries like China, where energy is also cheap, have banned bitcoin mining, leading miners to seek alternatives.
The Middle East is also a popular region considered by miners. Several countries in the area have cheap electricity. For example, the cost of 1 kWh in Kuwait is only 3 cents. However, countries in the region are also working on their own regulations, which will affect the mining industry.
Paraguayan regulation must be followed closely
When Paraguay announced it would implement incentives for bitcoin mining, miners rejoiced. The country is the fourth largest net exporter of electricity. The bill described cryptomining as “an industrial and innovative activity.”
Some lawmakers and government agencies in Paraguay have not approved the bill, believing crypto to be high risk. There probably won’t be any crypto regulations without a lot of deliberation.
South America is a popular region for the crypto industry. Argentina, Uruguay and Panama are also working on regulations for the crypto asset class.
