Bitcoin Mining Firms in Paraguay Groan Over 50% Electricity Rate Hike
Crypto mining companies in Paraguay are about to see a steep profit decline after the government hiked power costs by more than 50% for the industry. According to reports, once the new law is approved, electricity prices will see the once-profitable ventures becoming unprofitable in the country.
Power Fee Hike Threatens Industry
Once one of the leading crypto mining havens, Paraguay has become the latest country to adopt a harsh policy that would see crypto miners fleeing its environment. With the government proposing an over 50% hike in electricity fees, miners lament the sudden change of events in the country.
Per reports, the over 50% price increase is discriminatory against Bitcoin miners. However, the government explained that the hike was due to the low number of jobs the sector creates.
Nano Grijalba, the business development expert at Braiins Mining, slammed the government over its reasons for proposing such a massive hike. According to Grijalba, the government’s decision to increase the power costs for Bitcoin miners is biased because high-carbon emission sectors pay lower fees for electricity costs.
Furthermore, the expert also raised concerns over the prospects of hosting activity in Paraguay, which involves offering mining logging services to third-party entities. According to him, fees and the margins of the global market make offering the same service impossible.
The Paraguayan Congress passed the legal draft for crypto mining regulations in the country in July 2022 and implemented limits to the number of electricity fees for the industry.
However, the nation’s President, Mario Abdo Benitez, disallowed the law a month later. The Paraguayan president explained that the industry’s energy demand is intensive, with high capital and low use of labor.
According to the President, the expansion of the crypto-mining sector might, in the future, force the country to import energy to meet domestic consumption. Moreover, the parliament attempted to pass the country’s crypto law without the president’s approval.
But it was undone by the lack of the required legislative vote to push the agenda forward. As a result, the move was finally discarded in December. Meanwhile, Grijalba stated that miners are collaborating with the Paraguayan authorities to reduce the burden they face when operating in the country.
Crypto Adoption In Latin America
Despite the Paraguayan Congress moving forward with its comprehensive crypto bill, which was unfortunately ditched, the country still ranks among the lowest in digital asset adoption in the region.
Over the past few years, Latin America has become a hotbed for cryptocurrency transactions, accounting for 9.1% of the global crypto trades in 2022. This represents a growth of 40% from the previous year.
Several reasons contribute to the region’s increased use of crypto assets and blockchain technology. Authorities are exploring the development of central bank digital currency (CBDC), and exchanges are setting up shops in the area.
Experts see the region as ripe with opportunities for crypto service providers to explore as the adoption rate continues to soar.
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