Paraguayan President Mario Abdo Benitez on Monday vetoed a bill that would have allowed cryptocurrency mining to be an industrial activity. He reasoned that the mining industry’s high power consumption could hinder the expansion of a sustainable domestic industry.
The order states that cryptocurrency mining does not create the same added value as other industrial activities because it uses intensive capital with less labor usage. All over the world, cryptocurrency is he one of the biggest job creators. LinkedIn’s economic graph shows that cryptocurrencies and blockchain 615% increase in job openings in 2021 Compared to 2020 in the United States.
According to the bill’s sponsor, Senator Fernando Silva Facetti, Law aimed at promoting virtual currency mining using surplus electricitybut the Paraguayan government has chosen to ignore its activities in the country:
1# Hoy recimos de @PresidenciaPy el VETO TOTAL a Ley “Que regula la minería, comercialización, intermediación, intercambio, transferencia, custodia y administración de #CRIPTOACTIVOSignorando existencia de esta actividad que hoy funciona en la sombra normativa. (Abrohiro)
— FernandoSilvaFacetti (@FSilvaFacetti) August 30, 2022
The Paraguayan Senate finally approved the proposal on July 14, recognizing cryptocurrency mining as an industrial activity. viewed as an indirect incentive to it says:
“By limiting the rate applied to crypto miner users to a slightly higher percentage than the current industrial rate, an indirect industrial incentive is provided for crypto mining.”
According to the documents, over the past 12 months, domestic industrial investment has increased by 220% to reach $319 million, while GDP has increased by more than 4% over the past five years. If this rate continues, the country’s industry may require the total amount of energy produced and available domestically to remain sustainable.
“If Paraguay wants to intensify cryptocurrency mining today, it will be forced to import electricity over the next four years,” the decree said.
The Senate-approved bill stipulates that miners must apply for licenses and request authorization for industrial energy consumption. It also established the Ministry of Commerce and Industry as the main law enforcement agency and the Anti-Money or Asset Laundering Secretariat to supervise cryptocurrency investment companies.
Paraguay’s low energy costs have spurred domestic and foreign companies to set up mining infrastructure in the country since 2020. According to the Global Gasoline Price Report, in December 2021, household electricity bills were $0.058 per kWh and business electricity bills were $0.049 per kWh.