The government in Paraguay has established steep hikes in the power fee charged from crypto mining companies and this has affected the profitability of these firms in the region.
According to reports from Nano Grijalba, the business developer of Braiins Mining, the hike in power fee that came into effect after the crypto law veto has made mining in Paraguay very unprofitable.
Change in Paraguay
There was a time when Paraguay was considered a haven for crypto and bitcoin miners, but it has now changed.
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Now, miners in Paraguay are complaining about the price hikes that have been implemented by the government, specifically for the crypto mining industry.
Business developer Nano Grijalba at Brainns Mining said that the hike in power prices by 50% was discrimination against the bitcoin mining industry.
He said that the government was using the low number of jobs the crypto mining industry creates as an excuse for this discrimination. He was also critical of the environmental logic behind the said measures.
He said that the decision of Paraguay to increase the fee for a clean industry like bitcoin mining and charge low fees from industries with high emissions was questionable.
He stated that priority needs to be given to clean industries for ensuring a sustainable future.
Hosting activity affected
Grijalba was also worried about the impact the price hikes would have on the country’s hosting activity, which comprises of offering mining rigs maintenance to third parties.
He elaborated that offering this service in Paraguay was becoming impossible because of the margins and costs of the international market.
A legal framework had been passed by the Paraguay Congress last year in July, which was aimed at regulation of crypto mining and exchange activities.
The said framework had also established limits that would be applicable to the power fee charged from crypto miners.
In August, the said law had been vetoed by Mario Abdo Benitez, Paraguay’s current president, who stated that the industry consumed a lot of electrical energy, was capital intensive but used very little labor.
The president also stated that Paraguay may have to import energy down the road if the crypto mining industry in the country continues to grow and expand.
Congress had made an attempt to pass the crypto law without the support of the president but did not have the support to do so, due to which the project was eventually shelved in December.
According to Grijalba, miners are cooperating with authorities for introducing laws that would help in reducing the burden on crypto miners that have been imposed by the government.
Grijalba stated that they were currently working on a new decree that would make crypto mining attractive once more and hoped to address another weak aspect of import taxes.
But, it should be noted that they did not provide any additional details about the new decree.
Nonetheless, Grijalba did add that these activities should be normalized in Paraguay because it can benefit the national economy.