Paraguay Parliament Fails to Pass Crypto Bill Regulating Bitcoin Mining 

Paraguay Parliament Fails to Pass Crypto Bill Regulating Bitcoin Mining

Paraguay’s lower house of parliament did not pass the country’s crypto bill after lawmakers failed to reach an agreement regarding the cost of electricity imposed on Bitcoin miners. 

In a blow to crypto miners, the Chamber of Deputies – Paraguay’s lower house of Parliament, has failed to pass a bill that would have regulated the crypto industry in the country. The Latin American nation is one of the hotspots for Bitcoin miners due to it boasting some of the cheapest energy rates in the world.  

The bill in question passed by the country’s Senate back in July was vetoed by President Mario Abdo Benitez in August, who sent it back to the legislature for amendments. According to the bill drafted by Congressman Carlos Rejala and Senator Fernando Silva last year, Paraguay’s Ministry of Industry and Commerce (MIC) and the Secretariat for the Prevention of Money and Asset Laundering will oversee the crypto industry, while the National Electricity Administration (ANDE) will be in charge of supplying energy to Bitcoin mining companies who need to be authorized by the MIC. 

Paraguay Parliament Fails to Pass Crypto Bill Regulating Bitcoin Mining

As a way to attract more miners, the bill proposed capping energy tariffs for crypto mining at 15% over current industrial rates, much to the dislike of ANDE. Following pressure from the local energy grid operator, President Benetez vetoed the bill citing that Bitcoin mining consumes high amounts of energy and generates lower returns and employment benefits when compared to other sectors of the economy. 

“Fixed mining of virtual assets requires the use of intensive and massive electrical energy and great capacity of energy production, which the country has. Nevertheless, it does not generate a lot of labor like any other sector industry,” said President Benitez in his decree. 

The bill also faced backlash from some members of the legislature, who supported the President’s claim that the industry does not benefit the local economy while putting excess load on the country’s energy grid infrastructure. ANDE requested the President’s Economic Team to raise electricity tariffs to 60% over the industry standard and also create a different consumption category for crypto mining. 

“On that point we believe that the cap has to respond to a cost structure so that it is viable for the installation of electric power supply,” said ANDE President Felix Sosa in an interview given to a local radio station in August. 

Sosa also wants mining companies to pay their tariffs in advance in U.S dollars with an annual readjustment. According to ANDE, miners are paying between 80 and 160 times less than the amount corresponding to real rates of their energy consumption. Companies that operate using illegal connections have created a loss of $2.2 million in the first two quarters of this year.  

Paraguay’s energy is mainly generated from the Itaipu dam, one of the largest hydroelectric plants in the world. Canadian crypto miner BitFarms – the largest Bitcoin mining firm in the world – operates a 10MW (Megawatt) facility in the country. In October, Pow.er announced that it had begun construction of two Bitcoin mining centers in Paraguay that will manage about 12 MW of hydroelectric power. 

Also Read Goldman Sachs Looking to Buy Collapsed Crypto Firms

In a voting held on Monday, the bill only got 36 votes in the parliament, short of the 41 that was required for it to pass and become law. 

At the time of writing, BTC is trading at $16,776, dropping 1.4% in the last 24-hours. 

Also Read UK’s Financial Watchdog Propose Amendments to Crypto Bill

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