Paraguay’s legislature has approved a bill that creates a tax and regulatory framework for crypto mining in the South American country. The senate bill regulates businesses undertaking mining activities in the Bitcoin-friendly nation.
The proposal stems from legislation drafted last year by Congressman Carlos Rejala and Senator Fernando Silva Facetti, which also aimed to regulate cryptocurrency mining and trading. It now needs to be approved by President Mario Abdo Benitez before becoming law.
This time, the legislation calls for the Ministry of Industry and Commerce (MIC) to oversee crypto industry service providers.
— SenadoPy (@SenadoresPy) July 15, 2022
The text of the bill has not been published yet, but the Congress of Paraguay’s website says that mining will need to be authorized by the MIC and that the National Electricity Administration will be in charge of energy supply.
It adds that the Secretariat for the Prevention of Money or Asset Laundering will supervise the buying of machinery by crypto companies.
Doesn’t sound like a big deal? It is, if it gets signed.
Paraguay is an increasingly attractive country for crypto: miners are flocking to the country for its cheap—and green—electricity, and lawmakers want to make it a crypto hub.
Bitcoin mining is the process of adding and verifying blocks of transactions to Bitcoin’s public blockchain. It is often done on an industrial scale as it requires lots of computers and therefore lots of energy.
Canadian mining giant Bitfarms announced last year that it was expanding to the country on a five-year lease with an annually-renewable power purchase agreement to secure 10 MW of green hydropower.
Even with the new law, however, Paraguay will be a few steps behind El Salvador. In the Central American country, Bitcoin is legal tender and businesses have to accept it, if they have the technological means to do so.
El Salvador’s controversial and eccentric leader, President Nayib Bukele, has also spent millions of dollars on the cryptocurrency—which he admitted he buys on his phone naked or “sometimes while in the toilet.”