The Paraguayan National Electricity Administration (ANDE) announced at the end of June that it would raise electricity prices for cryptocurrency mining, blockchain, tokens, and data centers by 14%, undoubtedly bringing greater operational pressure to the country’s mining industry.
Bitcoin completed its latest halving in April this year. Due to the reduction in block rewards, the operational costs for miners have increased, and some small miners with insufficient resources may be forced to shut down their mines and leave the mining industry.
However, just as miners are putting all their efforts into survival, the ANDE of Paraguay suddenly announced last week that they would raise the electricity prices for the country’s Bitcoin and cryptocurrency mining industries, increasing the electricity prices for mining cryptocurrency, blockchain, tokens, and data centers by a full 14%.
According to the investigation, Paraguay’s electricity benefits from abundant hydroelectric power generation, and there is currently no power shortage. Therefore, the sudden increase in electricity prices may have more political factors behind it.
Paraguayan officials: Hindering the development of the Paraguayan cryptocurrency industry
In response to this measure, many Paraguayan officials have expressed concerns that it will affect the development of the country’s Bitcoin mining industry. For example, Senator Salyn Buzarquis believes that this move conveys internal contradictions within the Paraguayan government and may affect future investments in the sector. At the same time, Andy Jasmin, Vice Chairman of the Paraguayan Digital Asset Miners Association, also pointed out that the increase in electricity prices has driven some mining companies to leave the country in the current unstable situation.
Vice President of the Hong Kong University of Science and Technology: China’s ban on mining is a missed opportunity
We know that in late September 2021, China officially announced the comprehensive ban on all activities related to digital assets, including investment, trading, and mining, resulting in all private crypto activities in China now existing in an “underground” manner.
At the first HashKey New Vision seminar held in Hong Kong on July 2, Wang Yang, Vice President of the Hong Kong University of Science and Technology, criticized the ban on mining policy, pointing out that this approach will only transfer the benefits of mining to other countries, leading to tax losses.
Although Paraguay does not completely ban cryptocurrency mining activities like China, the move to raise electricity prices undoubtedly adds pressure to miners who are already under pressure to survive. It is feared that it will trigger a wave of mining companies fleeing Paraguay, and the country’s friendliness towards the development of the cryptocurrency industry may also be called into question.
