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- The Paraguayan government plans to terminate special energy contracts with Bitcoin miners by 2027.
- Miners benefited from 10 years of preferential energy tariffs from the Yasireta and Itaipu hydroelectric dams.
Bitcoin mining in Paraguay could face setbacks starting in 2027 due to politically sensitive decisions, according to Ricardo Prieto Sosa, director and founder of the Paraguay Blockchain Chamber.
The executive was a speaker at Devconnect Argentina in Buenos Aires on November 21st. Prieto Sosa is a leading figure in the Paraguayan technology sector with over 30 years of experience and is also the Director of Blockchain Innovation at Paradata SA.
Prieto Sosa explained that Paraguay maintains one of the highest levels of Bitcoin mining participation in the world “thanks to the fact that there is economic energy” that attracts “many miners”. This resource has led Paraguayan miners to position the South American country as the fourth-largest contributor of computing power to the network.
The interviewee provided further background and said:Paraguay signed a special energy contract more than 10 years agoThe agreement, which miners also accessed when they arrived in the country, guarantees a differential rate on energy prices, although it includes conditions such as an obligation to shut down equipment during periods of high national demand.
According to the director of the Paraguayan Blockchain Chamber, the main change is that the Paraguayan government will not continue to provide benefits.
“The government’s message is that all contracts will end by 2027 and will not be renewed, or if they are renewed, they will be renewed by fewer companies and at a different cost.”
Why doesn’t the Paraguayan government renew the contracts with the miners?
Possible changes beyond 2027 answer discussions beyond the mining industry. For Prieto Sosa, this decision is no longer explained by the price of electricity, but rather by the destination of the energy produced by the country’s two large hydropower plants, Yacireta and Itaipu.
In Prieto’s words, Bitcoin mining in Paraguay isIAlthough it is a political concept, it is now being analyzed politically.The central point is the allocation of energy against the backdrop of expanding domestic consumption, in other words, who should receive the cheap energy produced by dams.
Experts suggested that Paraguay would use all its energy equivalent by 2030 in accordance with the bilateral dam agreement. In such a scenario, priority would be given to sectors that create more jobs. Prieto Sosa summed up the logic of the argument in these words:
“Who do we give our energy to? To the miners or to the companies that can create a thousand jobs?”
This standard is already reflected in recent legislative actions. The country has introduced penalties for illegal consumption of large amounts of energy, including up to 10 years in prison and confiscation of equipment.