Paraguay Warns: Bitcoin Mining Could Collapse the National Grid by 2029
Paraguay – a country known for its abundant and cheap hydroelectric power – is facing a serious energy crisis due to the explosion of Bitcoin mining. According to the Confederation of Paraguayan Industries (UIP), without timely intervention, the country’s power grid could completely collapse in just four years.
In a warning report just released, Julio Fernández – Director of the UIP’s Center for Economic Research – stressed that demand for electricity is increasing exponentially, largely due to the influx of cryptocurrency mining companies into Paraguay to take advantage of cheap energy.
“We are consuming more than one Itaipu turbine per year. Without urgent measures, the grid will not be able to withstand the pressure,” Fernández warned.
Currently, Paraguay’s electricity is almost entirely supplied by two giant hydroelectric dams, Itaipu and Yacyreta. The Itaipu dam alone – one of the world’s largest hydroelectric projects – is expected to produce 83,879 TWh by 2023. However, this capacity is becoming insufficient as demand from Bitcoin mining continues to increase.
Furthermore, since the Itaipu dam is jointly owned with Brazil, a large portion of the electricity produced is also sold or distributed to the neighboring country, further limiting the amount of electricity available for domestic consumption.
To avoid an energy crisis, the UIP has proposed several strategic solutions. One of them is that Paraguay should take advantage of the gas agreements between Argentina and Brazil to build an alternative electricity infrastructure – including thermal power plants using natural gas.
“Paraguay could earn $400 million a year from tolls and gas transit alone. Moreover, a thermal power plant would not only be enough for domestic use but also export electricity to Brazil,” Fernández stressed.
Although the Paraguayan government has recently imposed some controls and increased taxes on Bitcoin mining, many companies continue to expand. Hive Digital, one of the leading mining groups, plans to increase its operating capacity by up to 400% after completing a 200 MW power plant in Paraguay.
Experts warn that if the government does not have a long-term plan to balance attracting investment and protecting the national energy system, Paraguay could pay a heavy price for the “Bitcoin fever.” The national grid, once a symbol of hydropower success, could become a fatal weakness in the near future.