HIVE Digital, a leading Bitcoin mining company, has announced its plans to construct a massive 100-megawatt digital asset mining facility in Paraguay. This strategic expansion comes amid concerns over the South American country’s plans to increase electricity prices—a move that has the potential to significantly impact the local cryptocurrency mining industry.

In a statement released on July 22, HIVE Digital outlined that the new facility would add 6.5 exahash per second (EH/s) to its global Bitcoin mining operations, bringing the company’s total EH/s to an impressive 12.1 EH/s. As part of this expansion, HIVE has also acquired 500 additional S21 Pro Antminers, which will further boost its operational hashrate to 5.6 EH/s once fully installed.

The decision to expand in Paraguay follows meetings between HIVE Digital executives and Paraguayan President Santiago Peña. During these discussions, HIVE emphasized the importance of stable government fiscal policies, particularly regarding energy pricing and taxation, as critical factors for future growth. The project is expected to generate over $100 million in stable US dollar revenue for Paraguay’s state-owned utility company over the next three years.

Despite the optimism surrounding this expansion, the Paraguayan Bitcoin mining community is expressing significant concerns about the impending electricity price hikes. Jimmy Kim, spokesperson for the Chamber of Digital Asset Mining (Capamad), warned that these increases could force up to 70% of the country’s legal crypto miners to shut down operations. This, Kim argued, would lead to thousands of job losses and jeopardize over $1.5 billion in planned technology and infrastructure investments.

Capamad has acknowledged the need to combat illegal crypto mining activities but stresses that legal operators, who have already invested over $700 million in Paraguay, should not bear the brunt of these price hikes. The organization has urged the government to reconsider its stance, noting that legal mining companies are major contributors to the Paraguayan economy.

In response to these concerns, Paraguay’s national electricity commission, Administración Nacional de Electricidad (ANDE), has cited the disruptive impact of crypto-mining operations on the local power grid. ANDE has introduced stringent penalties, including up to 10 years of imprisonment and the seizure of assets used in illegal mining activities, as part of a broader effort to protect the country’s electrical system.

HIVE Digital’s expansion into Paraguay, despite the looming energy cost increases, reflects the company’s commitment to scaling its operations and supporting industrial development in the region. The company has also pledged to offer its expertise in grid balancing and demand response to help Paraguay monetize its surplus power assets.

As the situation unfolds, it remains to be seen how the balance between fostering a thriving cryptocurrency mining industry and maintaining stable energy costs will be managed by Paraguayan authorities.

Source: CryptoSlate