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Paraguay Restricts Crypto Mining to Address Power Shortages

As the crypto miners prepared for the 2024 Bitcoin halving, the investors in Paraguay were locked out of numerous opportunities associated with this historical event. In an official communication, the Paraguay authorities issued directives to indefinitely suspend crypto mining in the region. 

The decision to halt crypto mining activities in the South American country stemmed from power shortages in the region. In the report, the Paraguay authority lamented that some crypto miners operated illegally in the area. 

Rise of Illegal Crypto Mining in Paraguay

Driven by the desire to optimize Bitcoin mining, some miners had illegal connections to the national power grid. The illegal electricity connection interfered with the power supply in Paraguay amid the sizzling summer heat. 

In most cases during the summer, the electricity demand usually increases due to the high consumption of energy in households.


To maintain the average temperature, most households turn the air conditioning to the coldest setting, which consumes a lot of electricity. This obliged the Paraguay authority to step up and ensure adeaquate supply of electricity.

To address the situation, the policymakers in Paraguay took decisive action to stop the illegal miners from interfering with the power supply. Firstly, policymakers agreed to impose restrictive regulations on crypto mining in the region. 

A review of the draft bill demonstrated that the creation, storage, and commercialization of digital assets will temporarily be suspended. The new provision limits potential investors from establishing crypto-mining facilities in Paraguay.

The prohibition of crypto-related activities in South American country will be effective in the next six months. However, the lawmakers agreed to revisit the new law if the National Electricity Administration (ANDE) confirms that the power grid has adequate power supply to support Bitcoin mining. 

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Policy Makers in Paraguay Ban Crypto Mining

The directive from the ANDE will guide the Paraguayan legislators in removing the ban on crypto mining. The lawmakers will only uplift the ban on crypto mining if the ANDE confirms that any mining activity will not disrupt the operation of the national power grid.

The new rules deter the Paraguayan crypto die-hards from staking activities and owning substantial digital assets in their wallets. It implies that the crypto investors in the region will be restricted from tapping viable opportunities in the digital sector. 

Under the draft bill, any breach of the new rules will be punishable by the law. The policymakers clarified that the violation of the proposed legislation would be sanctioned under the existing rule.

Guided by existing regulations such as Law No.1160/1997, Central Bank of Paraguay requirements, and national financial system policies, the lawbreakers will be subjected to penalties and hefty court fines. 

Besides imposing the new rules, the Paraguayan law markers discussed the need for regulatory clarity for digital assets. They noted that the lack of clear rules governing the distribution of digital assets has impacted the violation of customer protection.

Factors Contributing to Power Shortage in Paraguay

The regulatory gap in the crypto sector has resulted in increased money laundering and tax cheat cases. The Paraguayan policymaker lamented the lack of clarity in regulating crypto, which has led to increased criminal activities in the region.  

Citing a recent incident where the Paraguay authority raided a renowned crypto mining facility in Quiindy. ANDE led the investigation to probe the operation of the mining site, which was believed to consume a measurable amount of electricity that could be sufficient to power the entire city of Quiindy.

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The probing team lamented that the amount consumed in powering illegal crypto firms exposed the ANDE to a loss of $60 million in revenue annually. Irrespective of the efforts to curb unlawful crypto mining in Paraguay, the community has expressed mixed thoughts concerning the new bill. 

On X, a crypto enthusiast, Luis Benitez, argued that enacting the new bill would expose Paraguayan to more risks. After reviewing the proposed legislation, Mr Benitez observed that the new provision fails to differentiate between the illegal and legitimate use of crypto assets.

In his argument, the X user underlined the need to develop clear, precise regulations that foster economic and technological growth. He urged the policymakers to revisit the impact of banning crypto-related activities in Paraguay.

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Kimberly Crain

Kimberly Crain is a seasoned crypto trader and writer, offering valuable insights into the digital asset market. With expertise in trading strategies and a passion for blockchain technology, her concise and informative articles empower readers to navigate the evolving world of cryptocurrencies.

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