Paraguay: A Key Destination for Bitcoin Mining in Latin America

In recent years, Paraguay has emerged as a key destination for data centers and Bitcoin mining, driven by its abundant, readily available renewable energy, competitive tax rates, and a favorable investment climate. With the growing global demand for digital activities, this South American country has become a strategic hub for miners aiming to develop a sustainable ecosystem for digital assets and Artificial Intelligence (AI).

Paraguay’s main attraction is its energy surplus, generated by the Itaipu Dam, one of the world’s largest hydroelectric plants with a capacity of 14 gigawatts. Shared with Brazil, this colossal facility produces more energy than Paraguay consumes, creating an electrical surplus historically sold to neighboring countries at low prices.

However, Bitcoin mining offers an innovative solution: transforming this surplus into a significant revenue source. For AI data centers, it positions Paraguay as the region’s most relevant player in this field.

Paraguay’s President, Santiago Peña, stated during his participation at the Panama Chamber of Commerce, Industries, and Agriculture: “Paraguay is ready to become a technological hub. My commitment is to continue working to open more doors to the world.”

According to estimates from the Energy Systems Research Group (GISE) at the Polytechnic Faculty of UNA, Paraguay could generate up to $2.5 billion by allocating this energy to high-consumption industries like Bitcoin mining, instead of exporting it at just $10 per megawatt-hour.

Paraguay consumes about 40% of its produced energy, meaning its immediate energy availability exceeds 3 GW—a unique reality globally. In an ecosystem where speed is critical and new energy sources develop more slowly than industry demands, tech giants are turning their attention to this South American nation.

This clean energy, sourced from the Itaipu, Yacyretá, and Acaray hydroelectric plants, meets the growing demand for sustainability in the Bitcoin industry, positioning Paraguay as a leader in green mining and a potential standout in green AI.

Additionally, the country’s political stability, industry incentives, and the completion of Itaipu’s debt repayment in 2023 could further reduce costs, making Paraguay a magnet for Bitcoin miners and AI data centers.

“Our intention as an industry is to contribute to the country’s technological transition while supporting the national electrical grid. We are working with the government on a proposal to secure consumption and generation contracts,” said Bruno Vaccotti, a director at Penguin Group, a pioneering company in Paraguay’s sector, partnered with global Bitcoin mining giants like Marathon Digital Holdings and Northern Data.

According to Vaccotti, foreign companies could receive incentives to establish operations in Paraguay through a three-year period during which they could develop generation projects equivalent to the energy they draw from the public grid.

“This innovation will accelerate the arrival of new companies and foster generation projects, further positioning Paraguay as a global benchmark for clean energy,” he stated.

Paraguay consumes about 40% of its produced energy, meaning its immediate energy availability exceeds 3 GW. Source: cloudfront.

A Favorable Investment Environment

Paraguay combines its energy advantage with a stable political and economic environment, alongside attractive tax incentives. Investment incentives backed by law and the possibility of establishing tax residencies make the country ideal for companies and entrepreneurs in the sector.

Moreover, bureaucracy aligns with investors’ needs: obtaining permits for such projects can take just days, with import tariffs among the most competitive in the region.

While challenges have arisen, such as a 2024 bill aiming to strictly regulate cryptocurrency mining and trading, the Paraguayan government has shown openness to dialogue in favor of the activity, reflecting shifts toward more supportive policies. This flexibility, combined with support from the state-owned National Electricity Administration (ANDE), bolsters sector confidence. This is why HIVE Digital Technologies entered the market late last year, acquiring 200 MW of Bitfarms’ operations in Paraguay, with plans to double its operations in the short term.

On the other hand, Paraguay’s hot and humid climate poses challenges for equipment cooling. Innovations like immersion cooling systems, implemented by Penguin Group, have delivered efficiency results at the highest global levels, reducing costs and extending machine lifespans. Additionally, the creation of skilled jobs and investments in electrical infrastructure, such as substations, generate long-term benefits for local communities and the national grid.

With only 0.15% of global Bitcoin hashrate, Paraguay has immense growth potential. Industry leaders see the country as “the new Texas” for mining and data processing, anticipating a surge of investors in the coming years.

As Paraguay capitalizes on its renewable energy and strengthens its technological ecosystem, it solidifies its position as a key destination for Bitcoin mining, driving economic development and innovation in the region.