Bitcoin Booms in Paraguay: The Latin American Country Emerges as a Major Mining Destination

Feb. 24, 2023
Bitcoin Booms in Paraguay: The Latin American Country Emerges as a Major Mining Destination

Paraguay has become one of Latin America’s largest Bitcoin mining hubs due to its surplus of cheap hydropower, attracting miners seeking cost-effective energy sources. However, bureaucratic red tape and power tariffs pose potential hurdles to the country’s hashrate growth.

The country’s low electricity prices and abundance of clean power make it a desirable location for BTC miners. These miners are seeking to mitigate the environmental impact of the energy-intensive process of mining cryptocurrencies.

Paraguay: A Prime Destination For Bitcoin Mining

According to a report by HashRate Index, Paraguay is becoming one of Latin America’s most significant BTC mining hubs. The country boasts a surplus of cheap hydropower, which has made it a popular destination for miners. The Itaipu Dam, the world’s second-largest hydropower plant, is responsible for much of Paraguay’s power.

Paraguay’s power infrastructure leaves it with more energy than it needs, with around 90% of its energy exports going to neighboring countries Brazil, Bolivia, and Argentina.

This surplus of energy has attracted Bitcoin miners seeking cost-effective power sources. Power provider CLYFSA, which can sell electricity in Villarrica, offers rates as low as $1.6/kWh, making contracts with the company highly coveted.

Source: HashRate Index

In Paraguay, the national grid operator, ANDE, has a monopoly on power production and distribution, which prevents hosting facilities from marking up the power they sell to miners. Instead, they receive a percentage of the miner’s profits, usually between 15-20%, depending on the size of the deployment.

Although electricity prices are competitive in Paraguay, regulatory barriers and power tariffs could hinder the country’s hashrate growth. ANDE typically allocates power in 6MW tranches per land lease, and profit sharing is a common requirement in Paraguayan hosting contracts.

Moreover, the country’s climate can reach high temperatures and humidity levels, making it unsuitable for air-cooled Bitcoin mining rigs. The Cambridge Bitcoin Electricity Consumption Index estimates that Paraguay housed 0.15% of Bitcoin’s hashrate in December 2021.

However, this figure is outdated and does not account for the use of VPNs. Additionally, it doesn’t include miners who host their machines in different countries where they reside. To supplement Cambridge’s figure, they used a bottom-up approach to sample every known Bitcoin mine in Paraguay based on Luxor business data and active miners in the country.

Abundant, low-cost hydropower In Paraguay

They estimated that there is anywhere from 100-125 MW of Bitcoin mining in Paraguay using this methodology. This would translate to 1.45% of the total network hashrate on the high end and 1.16% on the low end. The Hashrate Index’s Bitcoin Mining Energy Consumption Index made these estimates.

Related Reading | Cardano (ADA) Unlikely To Be Labeled A Security, Says Expert Dan Gambardello

Paraguay’s surplus of cheap hydropower makes it a prime destination for Bitcoin miners. However, regulatory mandates and power tariffs pose potential hurdles to the country’s hashrate growth. The country’s climate is not ideal for air-cooled Bitcoin mining rigs, requiring extra care for cooling and air circulation.

Despite these challenges, Paraguay’s cost-effective power sources and abundance of clean energy make it an attractive location for Bitcoin miners seeking environmentally sustainable energy options.

Ammar Raza

Associate editor
Skilled in crafting compelling content, with a deep enthusiasm for blockchain technology. I offer precise and easily comprehensible perspectives on cryptocurrencies, decentralized finance, and the ever-evolving landscape. Count on me as a reliable resource to remain informed about the latest advancements in the world of crypto.