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Paraguay Cracks Down on Illicit Bitcoin Mining Operations
Tim Alper
Last updated:
May 19, 2024 19:30 EDT
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2 min read
In a bold move to rein in unauthorized Bitcoin (BTC) mining activities, the government of Paraguay is seeking to empower its lawmakers to impose harsh penalties on offenders. The presidential spokesperson, Paula Carro, announced on Friday, May 17, that the administration has submitted a legislative proposal that could land illegal miners behind bars for up to a decade.
Protecting the National Grid: A Matter of Urgency
Carro stated that the proposed bill, deemed a matter of “urgency,” aims to “punish” those engaged in illicit mining operations with “multiple years in prison.” The draft law would also grant Paraguayan law enforcement and prosecutors the authority to seize mining equipment from unauthorized operators.
The government’s primary concern lies in safeguarding the state-owned National Electricity Administration (ANDE), as Carro explained that the “theft of large amounts of energy by illegal Bitcoin mining operators” poses a significant “threat” to the agency. The proposed legislation would allow courts to impose a maximum sentence of 10 years for the crime of energy theft.
Empowering ANDE: Seizing and Selling Mining Rigs
Under the new provisions, ANDE would be empowered to request police assistance in confiscating mining rigs and subsequently selling them, with the state-run firm set to benefit from the proceeds. This measure aims to address the growing problem of unauthorized Bitcoin mining operations tapping into the country’s abundant hydroelectric resources.
A Booming Industry, but at What Cost?
Paraguay has witnessed a surge in Bitcoin mining activities, with lawmakers actively working to bring the industry into the legal sphere. The country’s ample supply of hydroelectric power has made it an attractive destination for miners. However, the proliferation of illegal connections to the grid has led to overloads and other issues, prompting a crackdown by law enforcement.
Since the beginning of 2024, Paraguayan authorities have seized over 5,000 ASIC miners, signaling a determined effort to curb the unauthorized use of the nation’s energy resources. This legislative push comes as a parallel private member’s bill, seeking a temporary ban on Bitcoin mining until the illegal activity is resolved, remains in the committee stage.
Carro emphasized that the government’s proposed bill enjoys the backing of the Public Ministry, ANDE, and the Paraguayan Judiciary, underscoring the administration’s resolve to address the mounting financial losses incurred by the country’s power providers due to illicit Bitcoin mining operations.
The Yacyretá Dam, a major source of Paraguayan electrical power. (Source: Eby gov py [CC BY-SA 2.5])