Paraguay explores state Bitcoin mining using confiscated illegal equipment

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Paraguay explores state

Highlights

Paraguay considers state-backed Bitcoin mining using confiscated illegal mining equipment.
Hydropower surplus from Itaipu and other dams could power crypto mining.
Government partnership with Morphware explores national-scale digital infrastructure opportunities.

Water slipping through the fingers

Paraguay’s energy sector is unique: the country’s three operating hydropower plants — Itaipu, Yacyretá, and Acaray — with capacities of 14 GW, 3.2 GW, and 230 MW respectively, not only almost fully satisfy domestic electricity demand but also allow Paraguay to export significant volumes of power to neighboring Argentina and Brazil.

The largest of them, Itaipu, supplies about 78% of Paraguay’s domestic electricity demand, while Yacyretá covers roughly 19% and Acaray about 3%.

Overall, Paraguay produces far more electricity than it consumes. In recent years, the country has exported more than half of its total electricity generation, mainly to Brazil and Argentina.

Thanks to its cheap hydropower, Paraguay has in recent years been flooded with illegal crypto miners. However, the government has long made little effort to leverage its natural advantage for developing cryptocurrency mining or hosting large-scale data centers.

A shift in policy emerged after the signing of a memorandum of cooperation between Paraguay’s National Electricity Administration (ANDE) and Morphware, which will evaluate the feasibility of profitable cryptocurrency mining using the country’s available energy resources.

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“The agreement establishes a formal framework for collaboration and technical coordination between Morphware and ANDE, focusing on analyzing and developing initiatives related to digital assets, advanced data processing infrastructure, and strategic opportunities in energy technologies in Paraguay. … Morphware and ANDE will also explore the role of Bitcoin mining as a national-level opportunity,” Morphware CEO Kenso Trabing wrote on the company’s X page.

Will Paraguay follow El Salvador’s path?

According to Morphware and ANDE, one of the simplest ways to launch a pilot program could be using equipment confiscated from illegal miners. However, engineer and energy expert Nelson Cristaldo believes that generating profit using older-generation machines may be difficult. Therefore, the initiative will initially focus on analyzing potential future mining operations.

“But it’s very good news that the government is doing this. The government has a very unique vision,” Cristaldo added.

Fernando Arriola, chief financial officer of BC Mining, also told DL News that the government initiative is a step in the right direction. Although authorities have not yet expressed plans to create a national Bitcoin reserve, some observers, including Arriola, consider such a scenario possible.

Unlike El Salvador, which focused on accumulating Bitcoin as part of its national reserves, Paraguay may pursue a different model — monetizing its energy advantage. Electricity is one of the key pillars of the country’s economy: in different years it has accounted for between 13% and nearly 24% of Paraguay’s total exports.

The development of data centers and crypto mining could significantly increase the value added of this resource. Instead of selling excess electricity to neighbors at relatively low prices, Paraguay could convert it into digital assets or use it to power high-performance computing infrastructure.

Some projects in Paraguay are already moving in this direction. For example, new data centers powered by Itaipu hydropower can consume hundreds of megawatts of electricity and may serve as a foundation for developing the country’s computing and blockchain infrastructure industries.

In addition, legalizing and regulating mining could help reduce the scale of the shadow economy. Controlled deployment of mining farms and data centers could generate additional state revenue, stimulate technological infrastructure development, and gradually transform Paraguay into one of South America’s regional hubs for the digital economy.

As we wrote, El Salvador accelerates Bitcoin accumulation, holdings hit 7,500 BTC

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