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Increased Electricity Costs for Bitcoin Mining Expected to Result in $1.5 Billion Loss and 1,170 Job Reductions in Paraguay
Leaders in Bitcoin mining in Paraguay assert that the newly introduced electricity rates for the sector will result in nearly $1.5 billion in costs for the nation and will leave approximately 1,170 individuals unemployed.
According to Criptonoticias, these assertions were made by the recently established Paraguayan Chamber of Digital Asset Mining (Capamad).
Bitcoin Mining Leaders Caution About Job Reductions
The National Electricity Administration (ANDE) has revealed a new pricing structure. This will require most industrial miners to pay between 13% and 16% more monthly for electricity.
Capamad stated that the mining sector “could contribute $1,478,630,000 to the Paraguayan economy by year’s end.”
The increase in rates, according to Capamad, could “eliminate” the Bitcoin (BTC) mining sector, effectively making it unaffordable for many participants.
Capamad cautioned that ANDE’s “unsustainable” decision would “directly impact 1,170 jobs.” Additional “indirect jobs” associated with the mining sector would also be at risk, it noted.
The chamber further indicated that the price hikes “endanger the very existence of the sector” in Paraguay.
It elaborated that this action will “increase legal uncertainty and lead to an unprecedented decline in trust in the Paraguayan government and its officials.”
The Itaipu Dam in Paraguay. (Source: Jonas de Carvalho [CC BY-SA 2.0])
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The Bitcoin mining sector in Paraguay is significantly dependent on foreign investment. Historically, investors have been drawn to Paraguay’s ample surplus hydroelectric energy.
However, ANDE remains skeptical. It is concerned that a rapid increase in mining activities could strain its electrical grids. Additionally, it has been combating illegal mining operations.
In collaboration with law enforcement, the electricity administration has overseen the seizure of nearly 10,000 ASIC mining devices.
Bitcoin miners may need to consider liquidating their holdings as network fees decline and prices remain stagnant since the halving. https://t.co/qWhqh9wSWH
— Bloomberg Crypto (@crypto) July 2, 2024
Industry Leaders Advocate for Selling Miners’ Excess Power
Capamad expressed that investments that “have bolstered the nation’s economy and have established Paraguay as a global leader in the technology sector” are now jeopardized.
At present, Paraguay exports a significant portion of its surplus energy to other Latin American countries, particularly Brazil and Argentina.
However, Capamad contended that these exports “yield less revenue for Paraguay” compared to selling surplus energy to BTC miners.
Capamad asserted that it is “not too late” for ANDE to reconsider its decision and assist in “positioning Paraguay as an appealing destination for international investors.”
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