Paraguay, a country relatively unknown for its connections to cryptocurrency, is now being touted as a top destination in Latin America for Bitcoin miners. Mining insight company Hashrate Index has highlighted the country’s many advantages, which could make it one of the biggest hubs in the region.
Paraguay’s abundant access to cheap and clean hydroelectric power, largely generated by the Itaipu Dam, is a key factor driving this interest. With Paraguayans reportedly consuming only 10% of this energy, there is greater potential to use it for large-scale Bitcoin mining operations. This is particularly attractive after China’s recent miner exodus. As such, Paraguay may soon become a crypto powerhouse in Latin America.
Government concerns over cryptocurrency mining activities
According to Hashrate Index, there are two major disadvantages to choosing Paraguay as a bitcoin mining destination. Firstly, the summer climate in Paraguay can reach high temperatures and humidity levels, which can negatively impact the lifespan of air-cooled rigs.
Secondly, the government has raised concerns over cryptocurrency mining activity. President Mario Abdo even vetoed a cryptocurrency law passed by the Paraguayan Congress last year. Abdo argued that this activity is characterized by its high energy consumption, intensive capital expenditure, and minimal labor usage.
He also warned about possible energy shortages in the country if mining activities escalate. As a result, the national power company increased electricity fees for miners by over 50% in January, making it difficult for them to make profits and offer hosting services. This has caused a significant setback for the industry in Paraguay.