On July 14, the Senate of Paraguay sent a bill to the President’s approval to allow crypto miners to use excess energy and be exempt from Value Added Tax (VAT). If the bill passes by the President, Paraguay might become the next target of the crypto mining companies.
Paraguay’s Mister of Technology, Information, and Communication, Fernando Silva Facetti, celebrated the new bill via his Twitter account.
1) #Cripto #Paraguay After an intense debate @SenadoresPy, we’ve approved the Bill that regulates #cryptoasset activities. This new law establishes obligations, rights and warranties to investors, to the consumer and the Government…. #Bitcoin pic.twitter.com/ODpQxC3XZy
— FernandoSilvaFacetti (@FSilvaFacetti) July 14, 2022
Highlights from the bill
The new legislative offer introduces two significant changes in taxation and energy usage of crypto miners.
Energy
Paraguay compensates 85% of its total energy usage from the power it generates from its two dams, Usina and Itaipu. Therefore, the country offers affordable energy. While this is a benefit to crypto miners, the new bill takes the energy benefits one step further by providing the excess energy generated by the dams to crypto miners.
In other words, crypto miners will get an additional discount on the already cheap electricity. According to the new bill, the state-owned energy company ANDE will be responsible for determining the available energy, it’s pricing, and channeling it to the designated delivery points.
Facetti explained ANDE’s responsibility in his Tweet and said:
“ANDE will define the technical and commercial conditions for the connection, and will establish a special electricity pricing rate which cannot exceed 15% above the industrial rate.”
Value Added Tax
In addition to the affordable electricity, the new bill also looks to exempt mining operations from paying the VAT. However, even if the bill passes, miners will still be responsible for other tax fees in the country.
Minister Facetti pointed at The National Security and Exchange Commission as the institution in charge of regulations. If the bill passes, the commission will be responsible for regulating and supervising all trading activities, custody, and emissions of cryptocurrencies. While it is not directly disclosed, miners’ tax payments also seem to fall under the commission’s control area.
Troubles of miners
The new bill may provide what the mining community needs these days.
Crypto miners have been facing real challenges due to the current bear market prices. As soon as Bitcoin fell to the $20K levels in June, mining equipment older than 2019 lost profitability. While this gave individual miners a hard time, corporate ones have also been having trouble.
Compass Mining and Core Scientific are only two examples of many mining companies that had to sell their assets and equipment or close out branches to pay the bills.
Moreover, some crypt-favoring nations have been having a change of heart due to the winter conditions. Singapore, for example, decided to be a lot less accommodating towards all kinds of crypto companies. On the other hand, the mining heaven of the past two years, Kazakhstan, has been pushing miners out due to the energy crisis since November 2021.
In conclusion, miners all around the globe have been going through a serious rough patch. If the President of Paraguay accepts the new bill, crypto miners might get what they have been hoping for.