Paraguayan President Mario Abdo Benítez has spectacularly scuppered a much-vaunted bill that would have legalized and regulated Bitcoin (BTC) and crypto mining in the Latin American country.
As reported, the ambitious draft law began as a private member’s bill in the lower house and was formulated in conjunction with domestic miners who want to use surplus electrical energy produced at hydroelectric plants. It was eventually taken up by the Senate, where it was championed by Senator Fernando Silva Facetti.
The Senate then approved the bill, as did the lower house. But it appears to have fallen at the very last hurdle, with Benítez unhappy about how crypto mining’s electricity consumption could impact sustainability in the long run.
Benítez, per Portalo de Bitcoin, decreed that crypto mining “requires a high level of electricity consumption that could compromise the development and expansion of an inclusive and sustainable national industry.” The decree, which the President remarked had been made after taking advice from the nation’s central bank, also made note of the fact that mining makes “intensive use of capital and low use of manpower,” and “as such, does not generate added value” for the economy.
Earlier this month, Cryptonews.com reported that the bill had drawn criticism from many politicians, some of whom claimed that the draft law had been hurried.
Others still repeated all-too-familiar claims about mining’s alleged high carbon footprint. International miners have stated that they will agree to set up shop in Paraguay, providing they are offered special, low electricity rates.
The same critics also claimed that Paraguay has very little to gain by allowing international miners access to Paraguayan power – and that few domestic jobs would be created as a result.
This line of argument appears to have swayed Benítez.
But a furious Silva Facetti took to Twitter to criticize the President’s decision – which he labeled a “total veto.” The Senator claimed the veto made little sense considering the vast number of miners already operating in the country.
The Senator wrote that the Executive branch of the government was guilty of “ignoring the existence of” miners, who will now have to “work in the shadow of regulations.”
The Senator wrote that the President had “washed his hands of” mining, and forced it to “operate in a gray area, without being able to enjoy access to the financial system or build in investor protection guarantees.”
He added that Benítez had shown a “lack of vision” in his ruling opposes and had “destroyed the possibility of the arrival of new investors” – as well as crippling the hopes of “hundreds of small and medium-sized” domestic companies that “live and depend on this industry.”
Worse still, Silva Facetti warned, the move will mean that instead of using its surplus energy to fuel economic growth, Paraguay will have to hand over its excess power to its neighbors Argentina and Brazil.
Under bilateral agreements Paraguay has signed with both Argentina and Brazil, Paraguay must donate all the energy it generates at hydroelectric plants on rivers that border the nations if it is unable to either use or sell this electrical power.
Supporters of the bill have pointed out the fact that Paraguay’s infrastructure is set up to consume fossil fuels, rather than hydroelectric power – meaning that 10% of the country’s hydroelectric power is “unusable” in the nation. As such, failing to make use of the power – by allowing miners to buy it – will simply strengthen the economy of Argentina and Brazil at Paraguay’s expense.
Multiple Chinese and East Asian players were reportedly awaiting the confirmation of the bill before making final decisions on relocating to the country. Others, however, have already set up shop in the nation – and will likely now have to operate in a “gray,” unregulated area.
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