Paraguay’s plan to prohibit Bitcoin mining could result in an annual loss of $200 million.

A new bill introduced in Paraguay could have significant economic consequences for the country if passed. Lawmakers argue that illegal crypto mining operations are stealing power and causing disruptions to the electricity supply. The proposed ban would last 180 days or until new regulations are put in place and the national power grid operator can ensure sufficient energy supply. However, banning legitimate miners in the region could prove costly for Paraguay. Jaran Mellerud, the co-founder and chief mining strategist of Hashlabs Mining, emphasized the positive impact that Bitcoin mining has had on the country’s trade balance. Currently, Bitcoin mining firms are required to register and obtain authorization from the Paraguayan Ministry of Industry and Commerce. One major player in the industry, Marathon Digital Holdings, could be affected by the bill, as it has been deploying 27 megawatts around the Itaipu hydroelectric power plant. The Itaipu Dam has been a popular location for miners due to its surplus electricity, which has historically been exported to Brazil. However, Mellerud noted that Bitcoin miners have been purchasing this excess electricity at slightly higher prices in recent months. Lawmakers claim that there have been 50 instances of power supply interruptions caused by illegal crypto mining operations since February alone. The National Electricity Administration estimates that each mining operation has caused damages and losses of up to $94,900, with annual losses in the Alto Paraná area potentially reaching $60 million. Mellerud acknowledged that illegal operations can be detrimental to the power grid if they draw too much electricity from low voltage lines. This situation mirrors what happened in Kazakhstan a few years ago, which led to the government cracking down on the industry and expelling illegal mining operators. Mellerud previously predicted that Paraguay and Argentina would attract miners from the United States looking to expand or relocate to nations with abundant energy resources and lower electricity costs. The controversy in Paraguay arises as Bitcoin miners prepare for the upcoming Bitcoin halving event, which will reduce miner rewards from 6.25 BTC to 3.125 BTC.