It is reported that Paraguayan President Mario Abdul Benitez voted against the bill, which was approved by the Senate in mid July, and the mining and commercialization of cryptocurrencies were regulated and recognized as an industrial activity.

The judgment, issued by the President of the Republic of South America on Monday, said that secret mining involves high energy consumption, which may become an obstacle to industrial expansion.

The bill regulates the mining, commercialization, intermediary, exchange, transfer, supervision and management of encryption assets. Before being approved, it triggered a fierce debate in the Senate.

The main reason for vetoing Paraguay's cryptocurrency bill is the high power consumption caused by the exploitation of Bitcoin (BTC) and other cryptocurrencies, which is due to the intensive use of capital and the low utilization of labor.

The government claims that clandestine mining cannot be regarded as an industrial activity, but as an "electricity intensive consumption" operation. "It does not generate added value, but provides transaction registration and verification services of the distributed blockchain system," he added.

Senator Fernando Silva Facetti, who sponsored the bill, said that the purpose of the law was to use the surplus electricity produced in the country to promote the exploitation of cryptocurrency, but the government chose to ignore this economic activity.

For Facetti, the act of refusing to regulate the mining and commercialization of cryptographic assets ignored the existence of such activities. "Today, it works under the shadow of supervision", which Facetti wrote on his Twitter account.

Government reasons

The proposal approved by the Paraguayan Senate on July 14 recognizes clandestine mining as an industrial activity. In addition, it tried to ensure that the tax rate of this activity would not exceed 15% compared with the current industrial tax rate to encourage its growth.

According to the Presidential Decree, the rate applicable to cryptocurrency miners is only a small part of the current industrial rate, which represents "indirect industrial incentives for cryptocurrency mining," the Presidential Decree said.

This document proves the rationality of this decision, believing that the industrial investment in the country has increased by 220% in the past 12 months and the income is 319 million dollars. Similarly, it believes that economic activity has increased by 4 per cent in the past five years, so it is expected that the demand for electricity will also increase in the future.

According to the decree of President Benitez, "if Paraguay wants to strengthen the encrypted mining today, it will be forced to import electricity in the next four years."

on the other hand

Under the Act, crypto miners must apply for a permit in advance and obtain government authorization to operate their equipment and consume industrial energy.

In a word, Paraguay is one of the Latin American countries with the fastest growth in bitcoin mining in the past two years. Low electricity costs allow miners at home and abroad to set up their farms in this country. The President's order rejects the mining of Bitcoin (BTC) and other cryptocurrencies because it is not an industrial activity, which generates few jobs and consumes a lot of electricity.

According to Facetti, by vetoing the cryptocurrency bill, the Paraguayan government is denying the possibility of improving fiscal and financial transparency, which, in his view, "indicates that the country lacks foresight".