Mario Abdo Benítez, the President of Paraguay, has recently vetoed legislation on crypto mining. The legislation labeled crypto mining in the country as an industrial operation.
President Benítez Vetoes Crypto Mining Bill
Benítez argued that the enormous power usage of mining might impede the growth of a healthy national industry. According to the presidential decree, crypto miners use high capital and low manpower.
Hence, their activities would not generate value similar to what other industrial operations produce. Globally, cryptocurrency is among the largest creators of jobs.
The Economic Graph of LinkedIn revealed that blockchain and crypto jobs increased 615% last year in the US.
Meanwhile, the bill’s sponsor, Sen Fernando Silva Facetti, said the legislation was to promote the usage of surplus electricity for crypto mining. Unfortunately, the government decided to ignore the bill.
The country’s Senate had approved the legislation on July 14th. This made cryptocurrency mining an industrial operation in Paraguay. They also imposed a tax of 15% on mining related activities.
However, the decree views the tax rate as an indirect factor in fostering crypto mining. The ruling stated that:
“The rate for crypto miners is only a little higher than the present industrial rate. This offers an indirect economic advantage for cryptocurrency mining.”
Over the last year, industrial investment in Paraguay increased by 220%, generating about $319 million. Also, the GDP rose by about 4% over the previous five years.
If this pace persists, the national economy could need all the power generated and accessible in the state. This would help to ensure operations remain sustainable.
Intensifying Crypto Mining Activities Could Affect The Country
Additionally, the decree stated that intensifying crypto mining is bad for Paraguay. This is because it would force the country to start importing electricity within four years.
According to the bill, crypto miners would have to apply for a license. Also, they must request permission to use industrial energy.
The bill gave power to two bodies to govern the crypto sector. It made the country’s Ministry of Industry and Commerce the main law enforcement agency. Further, it established the Secretariat for the Prevention of Asset or Money Laundering as the agency to supervise cryptocurrency investment firms.
Meanwhile, the low cost of energy in the country has attracted foreign mining firms into the country. Even local crypto mining companies have installed mining machines in Paraguay.
Last December, a global report revealed the cost of household electricity was about $0.058 per kWh. The price for business electricity was $0.049 per kWh. This shows how cheap electricity is in the country.