Illegal cryptocurrency mining has become a significant issue in Paraguay, prompting concern among energy regulators.
According to the National Electricity Administration (ANDE), this illegal activity is primarily responsible for rising electrical losses, which have now surpassed 28%.
As the popularity of cryptocurrencies grows, so does the impact of unregulated mining techniques that deplete critical energy supplies.
Scope of electricity losses
Recent figures from the CEARE-BID consultancy for October 2024 demonstrate the significant impact of illegal mining on the national energy system.
It suggests that these operations involve major theft of electricity, which contributes significantly to the increased trend in overall energy losses.
According to ANDE data, these losses have increased from 26.2% to a stunning 28.5% in a relatively short period.
This worrying increase forced the Paraguayan government to develop a comprehensive management strategy to address the widespread issue of energy losses, particularly those caused by illegal mining activities.
The government’s “Master Plan for the Management and Control of Electrical Losses in Distribution” establishes a strategic framework for the period 2025-2034.
The paper distils substantial technical and operational research into concrete strategies and actions for addressing both technical and non-technical losses in the Sistema Interconectado Nacional (SIN).
A closer look at the data
The analysis exposes a disturbing trend in Paraguay’s energy loss statistics. Up to 2020, overall losses were consistent at roughly 26%.
However, large rises have occurred since 2021, reaching a peak of 28.5% in 2023.
These losses have severely impacted six departments: Canindeyú, Central, Alto Paraná, Itapúa, San Pedro, and Caaguazú.
These locations are now crucial to the government’s short-term measures for combating non-technical losses, according to a February 2024 research conducted by Ergon Energy and the World Bank.
According to the research, technical transmission losses account for 5.1% of total electricity losses.
The remaining 23.4% represents distribution losses, which are evenly divided between technical and non-technical losses.
Notably, it is projected that 11.7% of overall losses are commercial, which can be managed by proper governance and regulation.
Industry responses to rising tariffs
Paraguay’s Mining and Crypto Assets Chamber has raised concerns about prospective hikes in electricity rates.
They warn that any increase in energy costs will harm the already stressed cryptocurrency mining business.
According to a report by Cointelegraph in Spanish, the industry is concerned and advocates for a balanced approach that recognizes both the necessity for regulation and the economic benefits of cryptocurrency mining.
The Paraguayan government’s efforts to manage energy losses related to illegal mining involve not only investigating the methods of energy theft but also re-evaluating energy distribution and consumption patterns to develop a more effective system.
However, it is unclear how these measures will affect the cryptocurrency mining landscape and its stakeholders in Paraguay.
What’s ahead for Paraguay?
As Paraguay navigates the complexity of energy management while dealing with the obstacles provided by illegal cryptocurrency mining, the outcomes of the proposed plans will be vital to the country’s energy future.
Balancing the growing demand for clean, dependable energy with the demands of a changing digital economy will necessitate creative regulatory measures and collaborative involvement among government, industry, and communities.
Paraguay is at a critical juncture where proactive efforts are required to reduce energy losses, safeguard valuable resources, and build a sustainable environment for both traditional users and the expanding cryptocurrency sector.
The future years will undoubtedly impact the landscape of energy management in the country, particularly as Paraguay strives to retake control of its electrical networks and ensure that all sectors prosper within the confines of legality and efficiency.
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