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Paraguay’s Proposal to Imprison Illegal Bitcoin Miners for Up to 10 Years

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The government of Paraguay is urging lawmakers to pass a bill that could impose prison sentences of up to 10 years on illegal Bitcoin (BTC) miners. Earlier this month, presidential spokesperson Paula Carro announced that the bill had been sent to parliament with a sense of urgency.

Heavy Penalties for Illegal Bitcoin Miners

Carro explained that the proposed legislation aims to “punish” illegal mining activities with significant prison terms. According to Criptonoticias, the bill also authorizes Paraguayan police and prosecutors to confiscate mining equipment from unauthorized operators. The legislation is designed to protect the state-owned National Electricity Administration (ANDE), which has been severely impacted by the theft of large amounts of energy by illegal Bitcoin mining operations.

The bill stipulates that courts could impose a maximum sentence of 10 years in prison for those convicted of energy theft. Additionally, it allows ANDE to request the seizure of mining rigs, which can then be sold, with the proceeds benefiting the state-run electricity provider.

Rising Bitcoin Mining Activity in Paraguay

Bitcoin mining has experienced significant growth in Paraguay due to the country’s abundant hydroelectric energy resources. These resources make it an attractive location for BTC miners. Despite efforts by lawmakers to regulate the industry, many miners have established illegal connections to power grids, causing overloads and other problems for electricity providers.

In response, law enforcement agencies have intensified their efforts to combat illegal mining activities. Since the beginning of the year, police have confiscated more than 5,000 ASIC miners in various raids across the country.

Government Crackdown on Illegal Mining

ANDE has been actively involved in 17 raids on illegal Bitcoin and altcoin mining operations since the start of 2024. This crackdown has spurred legislative action, with at least 14 lawmakers supporting a private member’s bill that seeks to temporarily ban Bitcoin mining until the issue of illegal operations is resolved. However, this bill has yet to clear the committee stage and may not reach a vote in the legislature.

Should the government’s bill be approved, it is likely that the private member’s bill will be set aside. Carro noted that the government’s bill has the support of the Public Ministry, ANDE, and the Paraguayan Judiciary. She emphasized that illegal Bitcoin mining has resulted in millions of dollars in losses for Paraguay’s power providers.

Legislative and Judicial Support

The Paraguayan government is pushing for swift legislative action to address the challenges posed by illegal Bitcoin mining. The proposed bill reflects a coordinated effort among various government entities to mitigate the impact of unauthorized mining on the national power grid and ensure the sustainability of the country’s electricity resources.

Paraguay’s New Crypto Legislation

As we also reported, Paraguayan legislators have recently convened to vote on a bill related to crypto-assets. During this session, the bill received overwhelming support, with 40 deputies voting in favor and only 12 opposing it. The new law focuses on empowering regulators with the necessary authority to oversee firms that offer crypto services. These regulators will be responsible for issuing licenses, monitoring the activities of these firms, and ensuring they comply with established regulations.

Despite its crackdown on illegal mining, one of the primary motivations behind Paraguay’s move towards crypto regulation is its desire to maintain its status as a hub for foreign miners. This appeal is largely due to the country’s low electricity rates, which have been the lowest in the region for the past five years. By establishing a regulatory framework, Paraguay aims to attract and retain these mining operations.

The proposed bill outlines the requirements for both new and existing industrial miners wishing to operate within the country. These miners will need to obtain permits and approvals before starting their operations. Additionally, the bill addresses individuals and businesses looking to facilitate crypto services, ensuring that all players in the market adhere to the same standards.

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