The adoption of bitcoin (BTC) by States is an increasingly common practice. After El Salvador and the Central African Republic, Paraguay also seemed on track to do so. Indeed, the parliament had passed a law to regulate the mining of bitcoin in the country. But against all odds, Mario Abdo Benitez, the President of the Republic, vetoed to sabotage the project. He was able to count on the support of the country’s central bank and that of certain politicians.
The Bitcoin (BTC) bill that is dividing an entire country
Paraguayan deputies had undertaken to regulate cryptocurrency mining by passing a bill. To put the odds on its side, the lower house has worked in partnership with national miners who want to use their excess energy produced in hydroelectric plants. After the lower house, the upper house of parliament took over and it was senator Fernando Silva Facetti who had the mission of defending this bill. In the end, everything went well with the adoption by the Senate and the National Assembly.
At the last moment, the President of the Republic sabotaged the bill on bitcoin with his veto. He believes that cryptocurrency mining “requires a high level of electricity consumption which could compromise the development and expansion of an inclusive and sustainable national industry”. The president does not regret his gesture, because it is the result of prior consultation with the country’s central bank. The latter argues that“an intensive use of capital and a low use of labor (…), as such, do not generate added value”. On the contrary, it is disastrous for the economy. These divergent positions have divided the country into two camps.
Who benefits from the rejection of the cryptocurrency mining bill?
Many critics were already flying before the formalization of the rejection of the Paraguayan president. Specialists point to the haste with which things were done. Environmentalists, for their part, point out the carbon footprint very high in the case of bitcoin mining. In addition, the conditions set by the international minors to settle in Paraguay seem complex. Without forgetting that the arrival of these minors would not have brought anything concrete to the country so far. There are also very few direct jobs. All these parameters are certainly at the origin of Benitez’s refusal.
Nevertheless, Facetti accuses the president of running away from his responsibilities and to lack vision, as this act could put the brakes on small and medium-sized crypto-related businesses. He fears the worst, since according to him, to continue their activities, the miners will choose to “work in the shadow of regulations“. His anger stems from the fact that all unused excess energy will have to go back to Argentina and Brazil, under certain agreements.
Conclusion
Two camps are currently opposing in Paraguay on the bill regulating the mining of bitcoin (BTC). On the one hand, we have the skeptics, led by the President of the Republic who countered the law. On the other hand, there are parliamentarians and lovers of virtual currencies who misunderstand this decision. With 10% of hydrological energy unused, denying access to international miners would be tantamount to favoring neighboring countries at the expense of Paraguay, concludes Facetti.
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