Paraguayan lawmakers have introduced a bill to temporarily ban cryptocurrency mining amid concerns that illegal cryptocurrency mining is disrupting the country's electricity supply.

The bill provides for a ban on the organization of mining farms, as well as on the extraction, storage and “commercial use” of cryptocurrencies. The ban will last 180 days (about six months). Or until a full-fledged law is passed, under which the National Electricity Authority (ANDE) will guarantee that it can supply enough energy to cryptocurrency miners without harming other users of Paraguay’s power grid.

The document states that the Alto Parana region in the southeast of the country, where the border with Brazil and Argentina passes, is particularly popular among miners. The region is home to the world's third largest hydroelectric dam, Itaipu, which supplies all of Paraguay's electricity needs. There have been 50 power outages in the region since February, which lawmakers blame on an influx of miners illegally connecting to the network.

ANDE estimates that each mining rig causes damage worth up to $94,900 (about 700 million Paraguayan Guarani), and annual losses in the Alto Parana region could rise to $60 million (420 billion Paraguayan Guarani).

The law on regulation of mining and cryptocurrencies, which local authorities will work on, will allow for better control of the industry, since investors are currently not protected from the risks of using digital assets. In addition, lawmakers fear that cryptocurrencies can be used for money laundering and tax evasion.

Let us remind you that in 2021, the Paraguayan Senate approved a bill according to which registered companies can use excess electricity to mine cryptocurrencies. In 2022, Paraguay was already close to passing a law to regulate and tax mining. However, then-president Mario Abdo Benítez vetoed it out of fears that high electricity consumption by miners would make the country's energy system unsustainable.