Paraguayan President Mario Abdo has issued an executive veto on the recently approved cryptocurrency bill.Abdo’s veto order states that cryptocurrency mining is an “energy intensive,” low value added activity. The bill will now be returned to Congress, where it will either be approved again or vetoed outright.
Paraguayan President considers cryptocurrency mining an energy-intensive activity
Paraguayan President Mario Abdo has vetoed an executive veto of the recently approved cryptocurrency bill after more than a year of debate in the Paraguayan CongressThe project, introduced in July 2021, will allow cryptocurrency mining companies and other virtual asset service providers to
aimed to clarify the rules with which they would have to comply.
The proposed bill enacted that cryptocurrency miners should pay 15% higher electricity rates than those paid by other similar industries. However, Adbo’s veto order establishes that this activity is “characterized by massive consumption of electrical energy, intensive use of capital, and little use of labor.” This Executive Order presents a bleak picture of this activity in Paraguay and predicts that if this industry grows significantly, Paraguay may be forced to import energy sometime in the future.
This action may slow the growth of the cryptocurrency and bitcoin mining industry in the country. Some companies had already been considering the possibility of entering the country since the Chinese mining veto that occurred last year.
Reasons for the veto
The veto was in response to some concerns raised by the country’s state electricity administration in August. At that time, the company was facing significant losses and had to stop supplying electricity to some mining companies. This was the result of power theft and power metering irregularities committed by some mining companies. The agency’s officers stated that they were losing more than $400,000 per month and expressed their opposition to the cost structure outlined in the bill that was vetoed and their support for a partial veto of it.
The future of the encryption bill was uncertain, as representatives would have to accept the move or send it to Congress to try to pass the encryption bill again. This is not the first time a president has vetoed a cryptocurrency bill in Latin America and blocked it, as Panamanian President Laurentino Cortizo vetoed a similar initiative last June due to cryptocurrency-related money laundering concerns.
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