After El Salvador declared Bitcoin legal tender in a rush, Paraguay, a few thousand kilometers to the southeast, wants to follow suit. Thanks to a massive dam, the landlocked South American country hopes to become a global mining hotspot. The timing couldn’t be better, the demand is high. BTC is used for retail, trading, in crypto casinos, for lending and as a safe invstment haven.
Carlos Rejala, an entrepreneur and independent member of Paraguay’s Congress, wants to follow in the footsteps of El Salvador’s bitcoin president Nayib Bukele and open his country to bitcoin. Specifically, it is probably about the fact that Rejala is currently working on a bill that is to be presented to Congress on July 14. The planned law is to legalize and regulate Bitcoin as a means of payment. The congressman announces that, like El Salvador, Bitcoin will be recognized as legal tender.
However, it is currently still open whether this will also be accompanied by the usual compulsory acceptance for legal tender, as is planned for El Salvador. So far, all that is known is that, according to the law, any transaction within the country CAN be carried out with Bitcoin, and that the state has a duty to educate and train actors from different sectors so that “this new type of electronic payment” becomes widely available.
This can be understood in the sensational way – that now the second Latin American country is about to introduce a Bitcoin acceptance requirement, thus beginning to form a belt of Bitcoin nations – or in the lame way: that it should be allowed to pay with Bitcoin – that is, that the cryptocurrency is not prohibited. That would be a non-news item under normal circumstances, and barely worth a side note internationally even for a country like Paraguay, where Bitcoin is still in the legal gray area.
Congressman Rejala is no doubt riding in the slipstream of El Salvador’s Bitcoin law. A rousing series of tweets from him feeds the suspicion that he wants to beat the advertising drum for Paraguay as a business location above all through the bill:
“Entrepreneurs and investors, you are looking at Paraguay for the first time: Can you imagine investing your capital in a financially fertile country? Can you imagine investing in the world’s largest producer of clean and renewable energy? With the lowest taxes in the region, 10 percent for income, 10 percent for sales, and 10 percent for personal income? With the largest youthful labor army and a southern market bloc (Mercusor) of more than 500 million people?”
Attractive location for Bitcoin miners
To be sure, Paraguay has long been an attractive location for Bitcoin miners. We wrote about this back in mid-2019. In early 2020, a reporter for the Neue Züricher Zeitung reported from a Bitcoin mine in Ciudad del Este, where a Paraguayan with Taiwanese roots, Antonio Li, has installed handsome Asic batteries under corrugated iron roofs and in an old sawmill. The mining equipment is powered by cheap electricity from Itaipú, the world’s third-largest hydroelectric plant, which on the border between Paraguay and Brazil provides far more electricity than the country of 7 million people can consume.
- Li sums up the situation for miners in Paraguay: In many places in the world, he says, mining is unprofitable and risk-free; in Paraguay, it is profitable but risky.
- In Ciudad del Este in particular, the high crime rate clouds the otherwise pretty picture. The place is considered a smuggler’s paradise, from which adulterated whiskey, textiles, electronics, drugs and weapons cross the borders.
- In addition, it is also questionable whether Paraguay has the necessary infrastructure to actually become a top mining location. The Internet is considered rather slow and unreliable; and as seen in Iran, for example, a country needs not only favorable electricity prices, but also a solid and strong power grid.
Regardless, Rejala aggressively promotes Paraguay as a mining location. For example, he comments on a video showing the dismantling of a mining farm in Sichuan with a waving hand icon and the invitation: “We’re waiting for you in Paraguay!”
Rejala is working with a company called Bitcoin.com.py to do this. This has nothing to do with the Bitcoin.com website, but is a service provider that helps build and invest in mining facilities in Paraguay. It is intended to help Rejala turn the country into a “global hub for crypto investors” and subsequently into a center of modern digital technology.