On Monday, August 29, Paraguay’s President Mario Abdo Benítez vetoed a bill recognizing cryptocurrency mining as an industrial activity. He reasoned that the high power consumption of mining could hinder the expansion of a sustainable national industry.
The decree said that crypto mining is capital-intensive and requires little labor, so it would not create the same value as other industrial activities. Globally, cryptocurrency is one of the largest job creators; crypto and blockchain jobs are up 615% in the United States in 2021 compared to 2020.
According to the bill’s proponent, Senator Fernando Silva Facetti, the bill aimed to promote crypto mining by using surplus electricity, but the Paraguayan government chose to ignore the activity in the country.
The Paraguayan Senate finally approved the proposal on July 14, recognizing crypto-mining as an industrial activity. According to the document, industrial investment in the landlocked South American country has increased by 220% in the last twelve months to US$319 million, while GDP has increased by more than 4% in the last five years.
If this rate continues, the national industry could require all the energy produced and available in the country to remain sustainable. “If Paraguay wants to intensify crypto-mining today, it will be forced to import electricity in the next four years,” the decree states.
The bill passed by the Senate requires miners to apply for a license and obtain a permit for industrial energy consumption. It also established the Ministry of Industry and Commerce as the primary law enforcement agency and the Secretariat for the Prevention of Money and Asset Laundering to monitor crypto investment companies.
The low energy cost in Paraguay has encouraged domestic and foreign companies to install mining infrastructure in the country starting in 2020. As of December 2021, the cost of electricity was US$0.058 per kWh for households and US$0.049 per kWh for businesses.
With information from Latina Press