The Paraguayan President Mario Abdo Benitez spectacularly defeated the bill that would have legalized and regulated Bitcoin (BTC) and cryptocurrency mining in the Latin American country.
As indicated, this project originated from a parliamentary initiative in the lower house and was formulated jointly with national miners who wish to use the excess electrical energy produced by hydroelectric plants. It was eventually taken up by the Senate, where it was defended by Senator Fernando Silva Facetti.
The Senate approved the bill, as did the lower house. However, the text did not convince Mr. Benítez who did not seem satisfied with the way electricity consumption could have an impact on long-term environmental sustainability.
Benítez, according to Bitcoin’s Portalo, decreed that mining “requires a high level of electricity consumption that could compromise the development and expansion of an inclusive and sustainable national industry.” The executive order, which the president noted was issued after consultation with the country’s central bank, also noted that the mining industry requires “high use of capital and low use of labor”. labour”, and “as such, does not generate added value” for the economy.
Earlier this month, Cryptonews.com reported that the bill had drawn criticism from many politicians, with some saying its preparation was botched.
Others repeated familiar refrains about the heavy carbon footprint of mining rigs. The international miners said they would agree to settle in Paraguay on the condition of benefiting from special and advantageous electricity tariffs.
The same critics also claimed that Paraguay had very little to gain from allowing international miners access to Paraguayan electricity – and that few national jobs would be created as a result.
This line of argument seems to have influenced Benítez.
But Silva Facetti, furious, has critical on Twitter the president’s decision. The senator claimed that the veto made little sense given the large number of miners already operating in the country.
The senator wrote that the executive branch of government was guilty of “ignoring the existence” of miners, who will now have to “work in the shadows of regulations”, without being able to enjoy access to the financial system or a guarantee of investor protection”.
He added that Mr. Benítez had shown a “lack of judgment” in opposing the decision and had “destroyed the possibility of the arrival of new investors” – while paralyzing the hopes of “hundreds of small and medium” national companies that “live and depend on this industry.”
Worse still, Facetti warned, the move means that instead of using its excess energy to fuel economic growth, Paraguay will have to hand over its excess energy to its neighbors Argentina and Brazil.
Under the bilateral agreements that Paraguay has signed with Argentina and Brazil, Paraguay must donate all the energy it produces in the hydroelectric power stations located on the rivers bordering these countries if it is not unable to use or sell this electrical energy.
Proponents of the bill have pointed to the fact that Paraguay’s infrastructure is designed to burn fossil fuels rather than hydroelectric power, which means that 10% of the country’s hydroelectric power is “unusable” in the country. . So, not using this energy – by allowing miners to buy it – will only strengthen the economy of Argentina and Brazil at the expense of Paraguay.
Many Chinese and East Asian players are said to have waited for the bill to be confirmed before making a final decision on settling in the country. Others, however, have already settled in the country and will likely have to operate in a “grey” and unregulated area.
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