Paraguay was previously seen as a hotspot for Bitcoin mining with its cheap energy and lax taxes.
But after amateur operations flooded the country, stole electricity and in turn attracted negative press, the nation clamped down on crypto cowboys.
Now, the South American country’s government has a new idea: Use machines confiscated from dodgy operations to kickstart a state-run crypto mining operation.
“By redeploying Bitcoin miners on regulated, utility controlled sites, we can transform unused electricity into productive compute that serves both the Bitcoin network and the global AI economy,” Kenso Trabing, founder and CEO of Morphware, the company working with the government on the initiative, said in a post on X.
The plan, according to Morphware and Paraguay’s state-controlled electricity firm, ANDE, is to use the country’s famously cheap and abundant leftover energy to mine with the machines. The two have signed a memorandum of understanding for the project.
Neither ANDE nor Morphware responded to questions from DL News.
But engineer and energy expert Nelson Cristaldo told DL News that the project for now would be an analysis for future mining operations.
“The confiscated machines are very old — two generations behind,” he said. “It would be very hard to make a profit with these machines.”
He added: “But it’s very good news that the government is doing this. The government has a very unique vision.”
Fernando Arriola, chief financial officer of Bitcoin miner BC Mining, told DL News that the initiative was a step in the right direction for the country.
“Illegal miners arriving in Paraguay gave our industry a very bad reputation,” he said.
“It’s a very good opportunity for the government to have a Bitcoin reserve, too.”
It is unclear whether Paraguay’s government plans to create a national Bitcoin reserve.
Paraguay was previously seen as being well-disposed to Bitcoin: A combination of business-friendly laws, cheap energy and an enthusiastic president attracted scores of miners post-2021.
Big players in the mining space, like HIVE Digital, Marathon, and Bitfarms, all set up shop there over the years.
But not all of the miners were legit, and after widespread electricity theft, the country’s authorities clamped down. Some top operators — such as Bitfarms — have since exited the country.
Paraguayan President Santiago Peña has in the past said he wants the country to be a tech hub.
Mathew Di Salvo is a news correspondent with DL News. Got a tip? Email at mdisalvo@dlnews.com.