Paraguay utility to end bitcoin power contracts as AI demand rises
Paraguay is moving to reallocate some of its cheap hydropower as rising domestic consumption and new artificial intelligence projects challenge the model that helped make the country a major bitcoin mining hub. The shift puts at risk power deals tied to roughly 4% of global bitcoin mining and opens the door to higher-priced electricity auctions for miners, AI operators and data centers.
Highlights
- ANDE will let all special cryptocurrency power contracts expire by Dec. 31, 2027, affecting 944 megawatts of allocations tied to the Itaipu Dam.
- Proposed new rules would cap total allocations for mining, AI, and data centers at 700 megawatts and shift future supply to higher-rate auctions, raising uncertainty for operators like HIVE Digital Technologies.
- A company linked to the $12 billion Iguazú AI City secured a 15-year hydropower contract, signaling Paraguay's shift toward prioritizing AI projects over bitcoin mining.
Power contracts face a fixed 2027 deadline
As reported by CoinDesk, Paraguay’s state utility ANDE plans to let all special cryptocurrency power contracts expire on Dec. 31, 2027, and officials describe that deadline as final.The move affects miners that currently hold about 944 megawatts of electricity allocations linked to surplus output from the 14,000-megawatt Itaipu Dam on the Brazilian border. For years, those arrangements helped attract foreign crypto companies with power priced at $44 a megawatt-hour, generating about $350 million in annual public revenue and helping lift Paraguay to the position of the world’s fourth-largest bitcoin mining hub.
Utility engineers have also proposed capping combined electricity allocations for mining, AI and data centers at 700 megawatts, while shifting supply to auctions at higher rates. That framework increases uncertainty for existing operators, including HIVE Digital Technologies, whose Paraguayan sites account for roughly 77% of its operating mining capacity.
AI projects intensify competition for hydropower
A new long-term AI project is already competing for the same low-cost electricity. A company linked to the planned $12 billion Iguazú AI City has secured a 15-year power contract backed by Paraguay’s hydropower resources.The agreement signals a broader change in how the country may prioritize industrial power demand as electricity consumption rises at home. If ANDE follows through with contract expirations and tighter allocation limits, bitcoin miners in Paraguay face higher operating costs and reduced access to one of the world’s cheapest renewable energy sources.
We have also discussed the broader context around the Bitcoin buy window shifting to early 2027 amid an extended correction.
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