Senators of Paraguay are now considering selling excess energy from its Itaipu hydropower plant to miners instead of the blanket Bitcoin mining ban proposed earlier.
Paraguayan Senator Lilian Samaniego confirmed in an April 10 senate session that local authorities will debate the alternative of selling excess energy to Bitcoin miners instead of the proposed cryptocurrency mining ban in an April 23 public hearing.
On April 4, Paraguayan lawmakers introduced a draft law to temporarily ban Bitcoin mining for at least 180 days. The reason for the suggestion is that illegal cryptocurrency mines have been allegedly stealing power and disrupting the country’s electricity supply.
However, only a few days later, the regulators approved another declaration to support local and foreign investment infrastructure. As part of these efforts, some lawmakers propose to sell excess energy from the country’s ITAIPU hydropower plant to Bitcoin miners instead of exporting it to Brazil and Argentina.
ITAIPU is the second-largest hydroelectricity generator in the world. It uses renewable energy resources for the production of electricity. The country’s electricity system is based exclusively on hydroelectricity, making Paraguay a rare example of an economy illustrating a successful shift to 100% renewable energy.
ITAIPU, along with other local hydroelectric power plants, allows generating more electricity than the domestic market needs. In this case, selling it to Bitcoin miners can be one of the ways to promote the global transition to renewable energy.
By rough estimations, the 45 licensed cryptocurrency miners in Paraguay can generate $48 million for the National Electricity Administration (ANDE) already this year. That figure is expected to further reach $125 million by 2025 after miners install more equipment.
In addition, as the cost of electricity production at Paraguay’s Itaipu’s hydropower plant is currently about $22 per megawatt-hour (MWh), it is forecast that ANDE could generate a 45% net profit margin by selling off excess energy to local Bitcoin miners at $40/MWh instead of further selling energy to Brazil at a subsidized $10/ MWh rate.
Senator Salyn Buzarquis even claims that Bitcoin mining operations could save ANDE from filing for bankruptcy without raising the utility rate for Paraguayan citizens.
The decision of Paraguayan lawmakers will directly impact the mining activities of one of the largest industry players, Marathon Digital Holdings. The mining operator expanded into Paraguay in November 2023, deploying 27 megawatts around the ITAIPU hydroelectric power plant. Marathon executives have continuously expressed the belief Bitcoin mining can eventually become carbon neutral and dedicated a lot of effort to the cause.
