Friday 02 September 2022 ▪ 8:00 am ▪
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Acceptance of bitcoin (BTC) by States is becoming an increasingly common practice. After El Salvador and the Central African Republic, Paraguay seemed to be on track to do so. In fact, the parliament had passed a law to regulate bitcoin mining in the country. But against all odds, Mario Abdo Benitez, President of the Republic, vetoed the project. He was able to count on the support of the country’s central bank and the support of certain politicians.
The Bitcoin (BTC) bill shared by an entire country
Paraguayan deputies promised to regulate cryptocurrency mining by passing a bill. To tip the odds, the lower house has partnered 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 whose mission it was to defend this bill. In the end, everything went well when the Senate and the National Assembly took over.
At the last minute, the President of the Republic sabotaged the bill on bitcoin to be vetoed. He believes that cryptocurrency mining “it requires a high level of electricity consumption which could endanger the development and expansion of an inclusive and sustainable national industry.”. The president does not regret his gesture, because it is the result of a prior consultation with the the country’s central bank. The latter argues that“Intensive use of capital and low use of labor (…), therefore, does not generate added value”. On the contrary, it is disastrous for the economy. The country is divided into two camps by these different positions.
Who benefits from the rejection of the cryptocurrency mining bill?
Many critics were already flying before the rejection of the Paraguayan president was formalized. Specialists focus on the haste with which things were done. Environmentalists, for their part, inform the carbon footprint very high in the case of bitcoin mining. In addition, the conditions laid down by the international minors to be resolved in Paraguay complex appearance. Without forgetting that there would be nothing concrete to the country because of the arrival of these minors. There are also very few direct jobs. All these parameters are certainly at the root of Benitez’s rejection.
However, Facetti accuses the president of running away from his responsibilities and lack of vision, as this action could put the brakes on crypto-related small and medium-sized businesses. He fears the worst, since according to him, to continue their activities, the miners will choose to “operate under the shadow of regulations“. His anger stems from the fact that the excess energy that is not used will have to go back to Argentina and Brazil, under certain agreements.
There are currently two camps opposing in Paraguay the bill that regulates bitcoin (BTC) mining. On the one hand, we have the skeptics, led by the President of the Republic who went against the law. On the other hand, parliamentarians and lovers of virtual currencies have misunderstood this decision. With 10% of the hydrological energy unused, denying access to international miners would be equivalent to favoring neighboring countries at the expense of Paraguay, according to Facetti.
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A doctoral student in financial law and an experienced SEO web editor, Cédrick Aimé is passionate about cryptocurrencies, trading, etc. He naturally participates thanks to his articles in the daily blockchain revolution for a better democratization of DeFi.