The President of Paraguay, Mario Abdo Bentez, has turned down the proposed bill to turn crypto mining into a commercial activity with concerns about heavy electricity consumption.
Paraguay Opts Against Crypto Mining
Recently, the president of Paraguay opposed a proposed bill to regulate crypto mining in the country. He reasoned that the heavy consumption of energy presents a problem for the economy and could hinder the expansion of a sustainable national industry.
According to the regulation, crypto mining does not produce added value on par with other industrial operations because it requires a lot of cash and little personnel. One of the main sources of employment creation worldwide is cryptocurrencies. According to LinkedIn’s Economic Graph, the number of crypto and blockchain employment listed in the United States increased by 615% in 2021 over 2020.
The proposed bill was intended to encourage crypto mining by making use of excess power, according to the bill’s proponent, Senator Fernando Silva Facetti, however the Paraguayan government decided to ignore the practice there.
The Paraguayan senate passed the bill on July 14 classifying cryptocurrency mining as an economic activity. They enacted a 15% tax on the associated economic activity, although the decree views the rates as a tacit encouragement for the sector.
The bill states that while the GDP climbed more than 4% over the previous five years, industrial investment in the nation surged by 220% in the preceding year to $319 million. The national industry could need all the energy generated and accessible in the nation if this pace is allowed to continue in order to maintain sustainability. However, the proposed bill has been rejected by the president.
Since 2020, local and multinational businesses have been installing mining infrastructure in Paraguay due to the country’s cheap energy prices. According to statistics on worldwide gasoline prices, home power expenses in December 2021 were $0.058 per kWh and commercial electricity costs were $0.049 per kWh.
Paraguay’s Wavy Relationship With Crypto
Over the last few years, Paraguay has made important decisions around digital assets and cryptocurrencies. There are rumors that the South American nation may adopt El Salvador’s policy and declare bitcoin official cash. A law that may have regulated and promoted cryptocurrency mining and trading was adopted by the Senate towards the end of 2021.
Paraguay’s Deputy of the Nation, Carlos Antonio Rejala Helman, declared last summer that the government will concentrate its efforts on a “important initiative” including Bitcoin and PayPal. Rumors claim that the country wanted to make its main cryptocurrency an official means of payment within its boundaries (similar to what El Salvador did).
The nation, however, gave up on those goals. The well-known economist and opponent of the cryptocurrency sector, Steve Hanke, was one of several who opposed the decision. He asserted last year that the discussions that followed El Salvador’s action caused Paraguay’s leaders to reconsider and change their decision.