Lawmakers in Paraguay have put forth a bill suggesting a temporary suspension of crypto mining activities within the country, citing concerns over the growing prevalence of illegal mining operations that are straining the national power grid.

The proposed legislation, introduced on April 4, seeks to prohibit the establishment of crypto mining farms and all associated activities related to the creation, storage, and trading of cryptocurrencies. Its scope appears to encompass not only the actual mining process but also the activities involved in staking and managing digital assets.

The proposed ban would be in effect for 180 days, or until a comprehensive regulatory framework is established and the National Electricity Administration (ANDE) can ensure that there is adequate energy supply for crypto miners without adversely impacting other users of the electrical system in Paraguay.

The bill highlights the surge in crypto mining operations in Paraguay, particularly in the Alto Paraná region along the southeastern border with Brazil and Argentina. This area is home to the Itaipu hydroelectric dam, one of the world's largest, which provides all of Paraguay's domestic electricity needs.

According to the draft legislation, the Alto Paraná region has experienced numerous instances of power outages since February, attributed to unauthorized crypto mining activities tapping into the grid. The National Electricity Administration estimates substantial financial losses, up to approximately $60 million annually, due to damages caused by these clandestine operations.

The proposed regulations aim to provide better oversight of the crypto industry in Paraguay, addressing concerns about consumer protection, money laundering, and tax evasion. It emphasizes the need for a legal framework to address the current regulatory vacuum surrounding digital assets.

In 2022, Paraguay was on the brink of implementing a tax and legal framework for the crypto sector, but the initiative was halted by then-President Mario Abdo Benítez, who expressed concerns about the environmental impact of crypto mining on the country's sustainable energy goals.