Hashlabs Mining Co-founder Warns Bitcoin Mining Ban to Cost Paraguay $200M Annually
Hashlabs Mining’s co-founder Jaran Mellerud warns that the proposal to ban Bitcoin mining could erode the activity’s positive contribution to Paraguay’s trade balance. The crypto mining executive considers that effecting the proposed ban would dent the country’s economy.
Mellerud indicates that the Paraguayan economy will lose over $200M annually if lawmakers approve the bill tabled recently. The bill seeks to prohibit crypto mining in Southern American countries.
Lawmakers tabled the draft bill on Thursday, April 4, alleging that illegal crypto mines were stealing power. The illegal miners were disruptive to the country’s electricity supply.
The lawmakers propose the ban to last six months or until the enactment of new laws. Also, the legislators sponsoring the bill require the ban to last till the national power grid operator assures it can supply the energy sufficiently.
Paraguay’s Economy to Lose Over $200M Annual Earnings
The Hashlabs Mining executive considers that imposing a ban on lawful miners in landlocked countries could prove costly for the economy. The chief mining strategist approximates that Paraguay could lose over $200M annually earned from the 500 megawatts that the miners pay $0.05 per kilowatt-hour as operating expenses.
Mellerud indicates that market size injecting over $200M into the economy is uncommon in Paraguay – a country with a modest population of 6.8 million. Also, the country ranks 94th in gross domestic product (GDP), estimated at $41.7 billion, as per Worldometer 2022 data.
Mellerud argues that Bitcoin mining positively contributes to the country’s trade balance. He lamented that the bill could plunge the legal miners into oblivion as it alters the current registration and authorization procedure deployed by the Ministry of Industry and Commerce.
The enactment of the proposals will impact the largest players in the mining segment. The Nasdaq-listed Marathon Digital Holdings (MARA) will play a heavy price months after deploying 27 megawatts of operations near the Itaipu hydroelectric power.
The Itaipu Dam has attracted crypto miners to set up operations. The hydropower dam supplies the locals, leaving a huge excess of electricity that miners tap.
Itaipu Dam has historically routed excess electricity to Brazil, often at low prices. Mellerud noted that the Bitcoin miners’ wave quickly snapped the excess energy at slightly higher offers.
Paraguay Replicating Kazakh Government’s Crackdown on Illegal Crypto Miners
The lawmakers have illustrated the detection of 50 cases since February where crypto miners interrupted the power supply due to illegal tapping into electricity sources. The National Electricity Administration approximates that crypto-mining operations are behind $94,900 in damages and losses.
The total losses within the Alto Paraná area could accumulate over $60 million annually. Mellerud acknowledged that illegal operations harm the grid, particularly when electricity is drawn from low-voltage lines.
Paraguay appears to be in a similar situation to Kazakhstan when the Kazakh government cracked down on the mining industry. The government kicked out illegal mining operators, a move that Mellerud supports.
Mellerud had previously indicated that Paraguay would rival Argentina in taking many US-based miners seeking to expand and shift operations to the energy-rich nations that offer lower electricity costs.
Bitcoin Ban to Affect All Crypto Users
In May last year, Luxor Technology confirmed that it would be readying a 100MW substation capable of powering 20,000 Bitcoin mining rigs. The ban would become a massive hindrance to such a course.
The controversial proposals by legislators coincide with a period when Bitcoin miners are days away from the upcoming halving event anticipated on April 20. The halving is set to cut the rewards for every completed block from 6.25 Bitcoin to 3.125 tokens.
Paraguayan-based Bitcoin analyst Joaquin Morinigo indicated that the law would directly affect the 50 legally operating mining entities. The miners have contracts that range from 6 – 100MW. The analyst warned that the bill’s approval would incapacitate all crypto users as it proposes prohibiting Bitcoin storage and trading.
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