Recently, the president of Paraguay, Mario Abdo Benítez had spectacularly rejected a bill aimed at regulating and legalizing Bitcoin and cryptocurrency mining in the country under an alleged reason of huge power consumption.
Several reports have indicated that Paraguay met be threading on the same path as El Salvador, by making Bitcoin a legal tender.
However, over the past couple of months, Paraguay had made some quantum leap towards the cryptocurrency world. The senate house approved a bill which started as a private member’s bill in the lower house, formulated in the interest of miners seeking the consumption of the excess electrical energy generated at hydroelectric factories.
The bill which was endorsed by Senator Fernando Silva Facetti, could have regulated and promoted the general mining and trading of cryptocurrency in Paraguay.
Benitez Makes A U-Turn
Paraguay’s President rejected the bill on regulating crypto mining and also the commercialization, exchange, transfer, administration and intermediation of crypto activities by giving his ‘total veto’
In the president’s defence, he decreed that crypto mining consumes a very high level of power that could jeopardize the development, growth and sustainability of industries in the nation.
President Benitez’s decree stemmed from the nation’s central bank’s counsel to the president on the fact that mining crypto is more capital intensive and less labour intensive and as a result, it does not generate much value to the economy.
Nonetheless, Benitez acknowledged the positive impact of the crypto niche on the economy, from generating resources to creating new job opportunities for several people.
The Paraguayan Senate approved the bill in July and also planned to impose a 15% tax rate on crypto miners.
Will Crypto Survive Paraguayan Authourities?
Some international miners have agreed to establish mining shops in Paraguay if given special and low electricity rates but some critics opined that miners will contribute very little to Paraguay if given access to Paraguayan power. This argument could have motivated the President’s decision.
A senator Silva Facetti criticized the president’s decision which he called a “total veto”. He claimed the veto never considered the large number of miners already mining in the country and described the President’s decision as lack of vision in his decision, damaging the chance of attracting new investors and killing the hope of small and medium sized companies that thrive on the expectations of this industry.
Carlos Antonio Rejala Helman, Paraguay’s Deputy of the Nation announced the intention of the government to focus on a project deemed important which included Bitcoin and PayPal.
Rumours alleged that the country intends to make the primary cryptocurrency a legal tender inside its boundaries.
Nonetheless, this intention has been abandoned by the country, following an opposing opinion of a renowned economist and crypto critic, Steve Hanke.
He claimed in a statement last year that it was the debate around the aftermath of El Salvador’s decision that made the Paraguay government revert their decision.