Paraguay has shut down more than 70 illegal bitcoin mines in the past five years, according to the country’s national energy supplier.

Illegal mines in Paraguay reportedly steal up to $60 million worth of electricity every year — enough to light a city, according to the Administración Nacional de Electricidad (ANDE). 

The Economist reports that illegal bitcoin miners contribute to an increasing number of blackouts in the country by overloading power lines unable to cope with increased demand.

ANDE has also admitted that seven of its own engineers are under investigation after they were accused of illegally installing crypto mines using the energy provider’s own power transformers.

The Paraguayan Fintech Chamber lobby group says that thanks to a combination of low taxes, predictable politics, and cheap imports of equipment, Paraguay is a mecca for crypto miners.

Read more: Malaysian minister says crypto miners behind $722M electricity theft

However, the Economist reports that public anger toward these crypto miners has pushed the government to enact laws that will allow its courts to sentence energy thieves to up to 10 years. 

In 2018, 90% of Paraguay’s energy was supplied by the Itaipu Dam. There are 50 bitcoin miners reportedly paying ANDE a tariff so that they can use the spare energy generated from the dam.

Elsewhere, the Malaysian government also claims illegal crypto miners stole $722 million worth of electricity between 2018 and 2023. This is roughly $144 million per year. 

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Paraguay’s national electricity authority has warned that a bitcoin mining boom in the eastern department of Alto Paraná could “jeopardize” national power stability, the Rio Times reports.

Engineer Miguel Ángel Baéz, technical director of the country’s National Electricity Administration (ANDE) explained that despite crack downs by authorities, illegal bitcoin mining operations keep popping up.

“While they disrupt one connection, two others connect,” he said.

The Alto Paraná Department lies in the east of Paraguay, sharing a border with Brazil and Argentina. The region is home to the single source of electricity for domestic consumption in the country: the Itaipu hydroelectric dam.

However, a single mining operation can use up “all the energy” of a generator meant for an apartment complex, Baéz explained.

Paraguay president vetoes bitcoin mining regulation bill

Paraguay has become an attractive destination for major foreign bitcoin miners due to low energy costs. The government approved a bill to outline a tax and regulatory framework for bitcoin mining in July. President Mario Abdo Benítez decided to veto it on the grounds that it uses too much energy and doesn’t create enough jobs.

“Fixed mining of virtual assets requires the use of intensive and massive electrical energy and great capacity of energy production, which the country has,” a presidential statement read. “Nevertheless, it does not generate a lot of labor like any other sector industry.”

If approved, the bill would have increased electricty costs for bitcoin miners by 15%. 33 senators voted to reject President Benítez’s veto at the end of September.

The bitcoin mining industry is currently in distress — miners sold more bitcoin than they mined, resulting in huge losses this summer. Bitcoin’s price plummet and rising energy prices have exacerbated the financial burdens.

Public bitcoin mining giants Hive and Bitfarms are down 75% and 80% year-to-date, respectively. The latter signed a five-year deal in late 2021 to build a 3,000-strong bitcoin mining farm in Paraguay at low energy costs.

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