Electricity Shock for Bitcoin Mining in Paraguay: $350 Million in Revenue at Risk - Kriptofoni

Paraguay, one of the world's major Bitcoin mining hubs, faces significant changes to its electricity supply conditions for cryptocurrency operations. The country's state-owned electricity company, Administración Nacional de Electricidad (ANDE), has announced plans to terminate special electricity contracts granted to cryptocurrency mining companies on December 31, 2027. This decision comes amid growing domestic electricity demand and increasing energy requirements from artificial intelligence data centers in the country.

Bitcoin miners currently generate approximately $350 million in annual revenue for the power utility, according to ANDE data. Revenue from electricity consumption by mining companies increased from approximately $100 million in 2024 to $295 million in 2025, with projected revenue for 2026 reaching $350 million. If existing contracts are not renewed, the change could significantly affect the operating costs and investment plans of major Bitcoin mining companies operating in Paraguay.

Current Mining Contracts

Paraguay has become an important hub for Bitcoin mining companies thanks to low-cost hydroelectric power generated by the Itaipu Dam on the Brazilian border. Miners operating in the country currently pay approximately $44 per megawatt-hour for electricity under special contracts signed with ANDE. These contracts are not subject to annual price increases, giving companies greater predictability over their energy costs.

However, growing electricity demand across the country has brought the existing pricing model under scrutiny. A new regulatory proposal developed by ANDE engineers would limit the total electricity capacity allocated to mining operations, artificial intelligence facilities, and data centers to 700 megawatts. The proposal also calls for electricity to be allocated through auctions, with a starting price of $56 per megawatt-hour.

Impact on Major Miners

HIVE Digital Technologies is among the companies that could be most affected by the proposed changes in Paraguay. According to the company's annual report filed with the US Securities and Exchange Commission (SEC), electricity agreements covering its Yguazú and Valenzuela facilities in Paraguay are scheduled to expire on December 31, 2027. The Yguazú facility has a contracted power capacity of 200 megawatts, while the Valenzuela facility has a capacity of 100 megawatts.

As of April 30, approximately 77% of the company's operational mining capacity was located at its facilities in Paraguay. HIVE has not disclosed details of its ongoing commercial discussions with ANDE regarding the future of these contracts. The company's ability to continue operating in the country may depend on renewing its existing agreements or securing electricity supplies under new contractual terms.

AI Competition for Power

Artificial intelligence data centers represent another major source of competition for electricity in Paraguay. A company associated with Iguazú AI City, a project with an announced investment target of $12 billion, reportedly signed a 15-year electricity supply agreement with ANDE on October 22. The agreement provides for the phased supply of up to 286 megawatts of electricity.

The project is reportedly backed by Founders Fund, while artificial intelligence cloud infrastructure company Crusoe is expected to operate its computing systems. This new agreement highlights that Paraguay's hydroelectric capacity is attracting demand not only from Bitcoin mining companies but also from developers of artificial intelligence infrastructure.

Developments in Paraguay suggest that maintaining a long-term competitive advantage through low electricity costs could become increasingly difficult for Bitcoin mining companies. Growing energy demand from artificial intelligence data centers may weaken miners' bargaining power when negotiating the renewal of their electricity contracts. However, the proposed 700-megawatt capacity limit and auction-based allocation model have not yet been finalized. The future operating costs of mining companies will depend on ANDE's final decisions and the terms of any new electricity supply agreements.