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- Paraguay plans a state-led Bitcoin mining pilot using seized machines.
- The program focuses on unused hydroelectric power and tighter grid control.
- Officials debate how to manage and hedge against Bitcoin.
According to the report, Paraguay is moving toward regulated Bitcoin mining with a new partnership led by its national power utility. The state-owned electricity monopoly, Administración Nacional de Electricidad, signed a memorandum of understanding with Morphware.
The agreement formalizes cooperation on a government-run program using confiscated mining machines and surplus hydroelectric energy. Morphware will act as a technical and advisory partner, while ANDE retains ownership and oversight.
Authorities have accumulated a large stock of Bitcoin miners seized from operators accused of stealing electricity or misclassifying businesses to access lower power rates. Enforcement removed illegal load from the grid but left the state with idle hardware.
Paraguay Redeploys Seized Bitcoin Miners
The pilot phase will utilize 1,500 seized miners at ANDE-controlled locations close to the substation. Such locations have fewer transmission losses. Paraguay hosts miners due to cheap renewable energy sources like the Itaipu Dam energy. The energy comes from the dam and is mostly exported to Brazil.
Illegal mining posed a threat to the energy grid. Illegal energy usage resulted in a loss of revenue for the government. The new system will not experience losses. The government will be able to realize revenue from the mining activities. Morphware will be instrumental in training and upgrading the infrastructure.
The buildings of the existing utility will be used for miners. The buildings will be upgraded to accommodate miners. There are different prices for energy in Paraguay. Different sectors have different prices. Mining energy costs fall in a higher category.
Cybersecurity Raises Concerns in Bitcoin Mining
There are financial implications as well. Government agencies have differing views on whether to sell the Bitcoin for government programs or to hold it for later use. Morphware suggests adopting a cautious strategy. They can use derivatives or futures to hedge production.
There is another security concern. Paraguay has been a victim of digital security breaches. Besides mining, there is a change in energy policy. Paraguay only uses a fraction of its energy production. The rest is exported at low margins. There is a need to find a way to utilize the energy at home.
Mining provides a means to utilize the energy without waiting for industrial demand. The memorandum is the first step. The results will be used to assess the viability of expansion. This includes new equipment that will be financed with structured products that will be used to hedge production in the future rather than using confiscated equipment.
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