Presiden Paraguay Veto RUU Crypto Karena Khawatir Penggunaan Listrik Yang Boros

Paraguay president Mario Abdo Benítez veto crypto bill. (photo: @PresidentciaPy)

JAKARTA - Paraguay president, Mario Abdo Benítez, vetoed a bill seeking to recognize cryptocurrency mining as an industrial activity, on Monday, August 29. He reasoned that high electricity consumption could hamper the continued expansion of the national industry.

The decision states that crypto mining uses intensive capital with low labor use, and therefore will not generate added value equivalent to other industrial activities.

Worldwide, cryptocurrencies are currently one of the largest job creators. LinkedIn's Economy Graphics show that the list of crypto and blockchain jobs rose 615% in 2021 compared to 2020 in the United States.

In accordance with the sponsor of the bill, Senator Fernando Silva Facetti, the law aims to promote crypto mining through the use of excess electricity, but the Paraguay government chooses to ignore activities in the country.

The Paraguay Senate finally approved the proposal on July 14, recognizing crypto mining as industrial activity. They set a 15% tax on related economic activities, but the decision saw brackets as indirect incentives for the industry.

"By lowering applicable rates for users of crypto miners to only a small percentage above current industrial rates, indirect industrial incentives will be offered for crypto mining," the Senate said in a statement.

According to the document, in the last twelve months, this industry investment grew by 220% in the country to US$319 million (Rp 4.7 trillion), while GDP increased by more than 4% in the last five years. If this figure continues, the national industry could require total amounts of energy produced and available domestically to remain sustainable.

"If Paraguay wants to intensify crypto mining today, in the next four years it will be forced to import electricity," Mario said while veto the bill.

The Senate-approved bill stipulates that miners must apply for permits and seek authorization for industrial energy consumption. It also forms the Ministry of Industry and Trade as the main law enforcement authority and the Secretariat for the Prevention of Money Laundering or Assets to oversee crypto investment companies.

Low energy costs in Paraguay have encouraged local and foreign companies to install mining infrastructure in the country since 2020. According to reports on global gasoline prices, in December 2021, household electricity costs are US$0.058 per kWh and business electricity costs are US$0.049 (Rp727) per kWh. Very cheap is even cheaper than Indonesia today, for the smallest household is Rp1352 per kWh.