Bitcoin Mining in Paraguay Generates Less than 400 Direct Jobs
The report was exposed and used by some of the country’s politicians who oppose cryptocurrency activity, and was prepared by the Instituto de Previsión Social.
Bitcoin mining in Paraguay has been in question in the Paraguayan Congress due to a report that showed the low level of employment it generates.
Specifically, the mining sector in Paraguay generates about 383 direct jobs and has 40 companies that do not report workers directly related to their activities.
Notably, this is not the first time the state of cryptocurrency mining in the South American country is in the news. This sector has been in the public eye due to hundreds of complaints related to corruption in the field of illegal cryptocurrency mining and energy theft.
The above does not mean that legal mining is not flourishing in this country, as in fact there are important cryptomining centers, such as the one located 2 km away from the city of Hernandarias, near the Itaipú Dam on the Paraná River. There is the Paraguayan mining company Penguin, which consists of hundreds of computers in a row, covering an area the size of a football field.
However, legal cryptomining was affected by the increase in tariffs, which forced the closure of this type of companies in Paraguayan territory. Consequently, according to the Institute of Social Prevention (IPS), 66% of mining companies do not register workers and do not contribute to social security.
Other Important Figures in the Report
The report also shows: “Approximately 50% of Paraguayan cryptominers spend less than 1% of their electricity bill on social services. Thus, it states that it “illustrates how harmful large transnational mining companies are to our hydroelectricity, making it worse at subsidized prices”.
Of the 40 mining companies that have a contract with the National Electricity Administration of Paraguay, their activities could also be illegal in the area of social security services, or they could outsource their operations without directly employing workers.
Thus, although very similar to other countries, Paraguay is experiencing a complex situation. It is undoubtedly a difficult problem to measure, given that the cheap energy in Paraguay is stimulating cryptomining, and with it, illegal mining.
Industry Implications of this Report
As a result of Paraguay’s environment, politicians are encouraged to increase contributions from mining companies.
In fact, the report assesses: “It could even be considered to have more severe measures for the large consumers of the special group of intensive consumption and less drastic measures for the small consumers of the same group”.
It is worth mentioning that already in 2022, President Mario Abdo vetoed a bill to legalize cryptocurrency mining, even though it had already been tested in Congress. The former head of state claimed that the industry consumed a lot of energy and employed few people.
Due to the increase in tariffs, some officials express that mining companies are unlikely to leave the country. However, mining closures show the impact of higher electricity prices.
Compared to other countries in the region, the South American country is becoming increasingly irrelevant in the mining sector. Furthermore, it is not clear that the situation will change in the near future or that Paraguayan officials will become more friendly to cryptocurrencies.
By Audy Castaneda