With an abundance of energy provided by the mighty Itaipú dam in Paraguay; a dilemma arises. Should the country invest in the sprouting crypto-mining industry, or invest in tackling the country’s immediate poverty?
Itaipú is a hydroelectric dam on the Paraná River which runs on the border between Brazil and Paraguay. The dam’s hydroelectric power plant produced the most energy of any in the world as of 2016, providing the country with an abundance of energy.
People from all over Latin America have taken advantage of this by setting up hubs of bitcoin and ethereum mining, creating a number of millionaires in the process. 20,000 cryptocurrency mining rigs have risen in the area around Ciudad del Este, the city near which the dam is located.
Generating over 103 million megawatt-hours of electricity per year, the surplus is sold to Brazil. The prices per kilowatt-hour is also significantly cheaper than other neighbouring countries. At the moment, Paraguay has the potential to become “Mining Mecca”, attracting miners from around the world.
On the other hand, many believe that the hydroelectric energy would be better be invested in improving the lives of those living in poverty, supporting domestic industries, improving social welfare, healthcare, infrastructure or negotiating deals to sell the renewable energy abroad. Paraguay has many internal issues to address – the World Bank statistics show it has the highest level of inequality in land ownership in the world. Spending the profound resource on cryptocurrencies seems counter-intuitive for many politicians or development expert.
The project of the Itaipú is shared with Brazil – of the twenty generator units currently installed, ten generate at 50 Hz for Paraguay and ten generate at 60 Hz for Brazil. In 2023, negotiations are due to take place between Paraguay and Brazil to discuss the the financial dividends. Director of an energy research group at the Universidad Nacional de Asunción, Gerardo Blanco, says that “2023 represents a unique opportunity for Paraguay.”
Blanco’s research group shows that by directing the energy which is sold abroad to domestic investment would create 2 millions jobs and quadruple the GDP. “This would be a quantum leap that will have huge implications for society, the economy, and even our culture,” Blanco says.
Meanwhile, there are those who believe that directing the dam’s profit into cryptocurrencies would undoubtedly be the best way to go. One of these is Gregorio Bareiro, whose personal business of selling air-conditioners to the increasing mining facilities benefited greatly.
“In 10 years, it would generate enough money to pay Paraguay’s external debt,” he says. “We’ve found a way out for our country. The best chance we have is not selling our energy to Brazil but investing in cryptocurrency.” Furthermore, Bareiro says that “Paraguay today is the only place where there’s abundant energy. We can become the center of global bitcoin mining,”
It is now a matter of what those who have the power have to say on the matter. An air-con-selling tech gentleman may not have the chances to convince politicians and government officials. Nonetheless, the financial benefits of crypto mining are widely known and will certainly be considered. It may be a wise choice to invest in the long run, if it truly has enough to pay off external debts in a decade’s time.
However, if the mining industries are privately owned and allow a few millionaires to pop out while the rest remain in poverty, there is question how much profit will transfer to the country as a whole.