Bitcoin miners pay Paraguay $350 million a year, but AI is pushing them out

For years, Bitcoin miners flocked to Paraguay for access to some of the world's cheapest electricity from the Itaipu Dam, turning excess energy into roughly $350 million in annual public revenue. But that bargain is now unraveling as Paraguay's national power company, ANDE, plans to let every special crypto contract expire on Dec. 31, 2027, as domestic electricity demand surges and artificial intelligence companies compete for the same cheap hydropower.

ANDE's decision comes as the country's electricity needs grow, with the utility's transmission master plan projecting national demand increasing nearly 8% annually through 2027 and about 5% yearly thereafter. The once-surplus hydropower supplied nearly 88% of the country's electricity in 2025, and more will soon be needed domestically.

Miners Face Uncertainty

The miner with the most at stake is HIVE Digital Technologies, a Nasdaq- and Toronto-listed company with 77% of its operating mining capacity in Paraguay. Both of its Paraguayan sites—a 200-megawatt facility in Yguazú and a 100-megawatt site in Valenzuela—have contracts running to Dec. 31, 2027.

HIVE's president of operations in Paraguay, Gabriel Lamas, has discussed plans to extend contracts at least 10 years and grow capacity from 300 to 1,000 megawatts within 18 months. However, the company wouldn't confirm these plans or discuss its talks with ANDE, calling such speculation hypothetical.

Engineers Propose New Framework

ANDE's engineers have proposed capping combined electricity allocations for mining, AI and data centers at 700 megawatts from Jan. 1, 2028, with power allocated through auctions at higher rates. Under their proposal, the floor would be $56 per megawatt-hour, compared to the current $44 rate miners pay.

Ubaldo Fernández, a spokesman for the Unión de Ingenieros de la ANDE, called the current mining load 'una carga disruptiva,' noting that national electricity demand rose about 50% in three years without corresponding economic growth. The engineers estimate that at $60 per megawatt-hour, ANDE could earn about $98 million more annually than it currently receives from miners.

AI Companies Secure Contracts

While miners face uncertainty, AI companies are securing long-term power deals. On Oct. 22, ANDE signed a 15-year contract to supply up to 286 megawatts to Kuntur, a company linked to Araico Corporation, which is developing the $12 billion Iguazú AI City. The power starts at 6 megawatts on Dec. 1 and jumps to 146 megawatts in April 2028.

The average cost of $48.91 per megawatt-hour beats miners' flat rate by about $5 and rises annually with U.S. inflation by at least 2.5%. ANDE has publicly called the 2027 deadline 'improrrogable,' meaning it cannot be extended, and reports pending requests for another 6,300 megawatts of supply, nearly the size of Paraguay's entire Itaipu share.

If the engineers' cap is adopted and Kuntur's power counts against it, miners would be left bidding for under 560 megawatts, less than three-fifths of what they currently hold. The competition for Paraguay's cheap hydropower is intensifying as the 2027 deadline approaches.