Paraguay warns about illegal Bitcoin mining and its impact on power stability

By: Dickson Arinze

November 1, 2022 3:07 AM

Paraguay's National Power Administration has issued warnings that the country's power grid could be jeopardized by the expansion of illegal bitcoin mining activities. Numerous unpaid miners are straining the electrical grid as the country's economic boom continues.

It is possible that Paraguay's power system stability is being undermined by the country's growing attractiveness as a bitcoin mining destination due to the country's low electricity prices. The National Electricity Administration (ANDE) made an announcement on October 28 stating that the recent surge in bitcoin mining has resulted in a dramatic increase in Alto Parana's electricity consumption, with several businesses connecting illegally to the grid.

Ande's technical director Miguel Angel Baez claims this has spurred increased patrols and surveillance along the border with Brazil.

Baez, however, claims that whenever the firm finds and shuts down a business, two more pop up in its place. It has been estimated that the daily energy needs of an entire apartment building can be met by only one of these covert operations.

The region is not unfamiliar with this type of trouble. In the past, certain miners who had committed electricity-related offenses had their power cut off by the National Power Administration. During supervisory inspections in August, direct connections, bypass connections, and altered power meters were discovered, as indicated by Alfredo Arguello, chief of the East Regional Management Division. These anomalies resulted in monthly losses of $400,000.

Given the current state of affairs in the industry, the National Power Administration is opposed to the proposed cryptocurrency bill's fee, which sets the maximum cost at only 15% more than what is collected from other analogous companies. Since then, the group has proposed a new set of electricity fees and said it would support a possible veto of the law for that reason.

President Mario Abdo vetoed the cryptocurrency measure on September 2, saying that bitcoin mining is inefficient due to its high energy use and low labor demand. On September 30th, the Paraguayan senate overrode the president's veto and moved forward with passing the measure without his approval.

This hasn't deterred bitcoin mining businesses from considering Paraguay as a potential location. The bitcoin mining firm Pow.re made an announcement on October 14 that it has begun building two mining facilities in the country to manage 12 MW of hydroelectric electricity.