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- Paraguay’s government plans to terminate special energy contracts with Bitcoin miners by 2027.
- Miners benefited from decade-old preferential energy rates from Yacyretá and Itaipú hydroelectric dams.
Bitcoin mining in Paraguay could face a setback starting in 2027 due to decisions driven by political considerations, according to Ricardo Prieto Sosa, director and founder of the Paraguayan Blockchain Chamber.
The executive spoke on November 21 at Devconnect Argentina in Buenos Aires, an event at which he served as a speaker. Prieto Sosa is a reference in the Paraguayan technology sector with more than three decades of experience and also serves as Director of Blockchain Innovation at Paradata S.A.
Prieto Sosa explained that Paraguay maintains one of the highest levels of Bitcoin mining participation worldwide, “due to the fact that we have economical energy,” which has attracted “many miners.” The resources led miners in Paraguay to position the South American country as the fourth largest contributor of computing power to the network.
The interviewee offered more context, indicating that “Paraguay signed special energy contracts more than a decade ago” with companies from different industries. The agreements, which miners also accessed when they arrived in the country, guarantee differentiated rates in energy prices, although they include conditions such as the obligation to turn off equipment during times of high national demand.
The central change is that the Paraguayan government would not continue the benefits, according to the director of the Paraguayan Blockchain Chamber:
“All contracts, according to what the government’s message sends, is that by 2027 they close, they will not renew. Or if they renew, they will renew with fewer companies and under another cost.”
Why Would the Paraguayan Government Not Renew Contracts with Miners?
The possible change after 2027 responds to a discussion that transcends mining. For Prieto Sosa, the decision is no longer explained by electricity prices, but rather by the destination that the energy generated by the country’s two large hydroelectric plants should have: Yacyretá and Itaipú.
According to Prieto’s words, Bitcoin mining in Paraguay “is a political concept, now it is analyzed politically.” The central point is the allocation of energy in a context of growing domestic consumption, meaning to whom the cheap energy produced by the dams is given.
The specialist indicated that, by 2030, Paraguay would use all the energy that corresponds to it according to binational dam agreements. In such a scenario, priority would be on sectors that generate a greater number of jobs. Prieto Sosa summarized the logic of the discussion with a phrase:
“To whom do we give the energy? To a miner or to a company that can create a thousand jobs?”
The criterion is already reflected in recent legislative initiatives. The country incorporated penalties for unauthorized consumption of high-volume energy, which include up to ten years in prison and equipment confiscation.
