Bitcoin Mining in Paraguay was called into question in the Paraguayan Congress due to a report which showed the low level of employment it generates.
This report, created by the Social Security Institute, was exposed and used by a segment of politicians in that country who oppose crypto mining activity.
Specifically, the mining sector in Paraguay generates some 383 direct jobs and has 40 companies, which do not report workers directly associated with their activities.
It is worth noting that this is not the first time that the state of Cryptocurrency mining in the South American country has been in the news. This sector has been in the public eye due to hundreds of complaints related to corruption in the field of illegal crypto mining and energy theft.
This does not mean that legal mining does not thrive in this country, as it does have important crypto mining centers, such as the one located 2 km from the city of Hernandarias, near the Itaipú dam on the Paraná River. There is the Paraguayan mining company Penguin, made up of hundreds of computers lined up, occupying a large area the size of a soccer field.
However, legal crypto mining activity is affected by the rise in fees and has forced the closure of this type of company in Paraguayan territory. As a result, the Social Security Institute (IPS) now shows that 66% of mining companies do not register workers and do not make contributions to the social system.
Other important figures from the report
The report also shows that approximately 50% of Paraguayan crypto miners provide less than 1% of their electricity bill to social care. Therefore, it points out that it “exemplifies how harmful large transnational extractive companies are to our hydroelectricity, worsening it at subsidized prices.”
Of the 40 mining companies with a contract with the National Electricity Administration of Paraguay, their activity could also be illegal in the area of social security services or by outsourcing their operations without employing direct workers.
Thus, the country is experiencing a complex situation, although very similar to that of others. It is undoubtedly a difficult problem to measure given that Paraguay’s cheap energy stimulates crypto mining and with it illegal mining arises.
The consequences of this report in the sector
The consequences of the context in Paraguay are the inducement of politicians to increase contributions from mining companies.
In fact, the report assesses: “We could even consider having stricter measures for large consumers in the Special Intensive Consumption Group and less drastic measures for small consumers in the same group.”
It is worth noting that in 2022, President Mario Abdo vetoed a bill to legalize cryptocurrency mining, although it had already been tested in Congress. The former president cited the high energy consumption and low labor force in the sector.
Some officials say mining companies are unlikely to leave the country because of the tariff hike. However, the closure of mining farms reveals the impact of rising electricity prices.
This makes the South American country even more irrelevant in the mining sector compared to other countries in the region. Moreover, it is not clear that the situation will change in the near future or that Paraguayan officials will become more friendly to cryptocurrencies.
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