James Cirrone

Bitcoin mining company Bitfarms is continuing its hydropower bent.



In the latest instance of the publicly traded Bitfarms turning to hydroelectric power to run mining rigs, the company has landed a number of contracts in Paraguay to boost its presence in the country. The agreements, Bitfarms said Monday, will result in new mining operations.&nbsp;



In all, a projected 150 megawatts of hydroelectric power will come from dams, with Bitfarms negotiating two purchasing agreements. Bitfarms in 2021 acquired a hydropower plant in Washington and has continued to double down on that approach.&nbsp;



About 50 megawatts will power the existing location in the southern city of Villarrica. Bitfarms said it will commence construction on a second mining facility and a substation in Villarrica in the third quarter.



The remaining 100 megawatts will come from the third-largest hydroelectric dam in the world, Itaipu, and will power another forthcoming mining operation in Yguazu. That mining farm has no current timeline for completing construction, according to a <a href="https://investor.bitfarms.com/news-events/press-releases/detail/201/bitfarms-secures-contracts-in-paraguay-for-up-to-150-mw-of">statement</a>.



Bitfarms CEO Geoff Morphy said the upcoming bitcoin halving has resulted in a focus on growth potential in the short term. The event, which is <a href="https://blockworks.co/news/bitcoin-halving-a-year-out">expected to have an industry-wide impact on cryptocurrencies</a>, should take place around mid-April 2024.&nbsp;



“We are seeking to drive growth by leveraging our farm design expertise and drawing upon our operational experience to broaden our geographical presence and optimize global, underutilized power resources,” Morphy said in a statement.&nbsp;



“Paraguay has access to an abundance of surplus renewable power, and these acquisitions secure valuable, yet limited, sustainable energy contracts,” he said.



The halving, as well as the price of bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) calculated against power costs, has a demonstrable effect on the profitability miners can expect.



For example, a little less than two weeks after the FTX collapse, <a href="https://blockworks.co/news/bitcoin-price-drop-tests-miners-diamond-hands">bitcoin was down over 60% from the beginning of the year</a> to around $16,300. Over that same period, electricity prices were up around 13%. This tested miners’ ability to stay afloat, especially smaller operators. 



But in January 2023, bitcoin was hovering in the $23,000 range. At that time, <a href="https://blockworks.co/news/bitcoin-price-boosts-miners-as-hashrate-climbs">the global hash rate was hitting all-time highs</a> — and mining stocks were in the green.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/thebreakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

Bitcoin mining

Bitfarms doubles down on Paraguay, secures additional hydropower to buoy mining rigs

Jacquelyn Melinek

<div id="highlights-block_60c0dbad9c6f9" class="highlights">
 <ul>
 <li>El Salvador’s central bank President Douglas Rodriguez said bitcoin is already being used in the country and “it’s not something people need to be afraid of.”</li>
 <li>Other Latin American politicians show support for bitcoin, opening the door for potential new opportunities in neighboring countries </li>
 </ul>
 
</div>



El Salvador President Nayib Bukele tweeted that the “Bitcoin Law” has been approved by a “supermajority&#8221; in the El Salvadoran Congress on June 9, making the country the first in the world to formally <a href="https://cms.blockworks.co/el-salvador-to-become-first-nation-with-bitcoin-as-legal-tender/" target="_blank" rel="noreferrer noopener">adopt bitcoin as legal tender</a>.&nbsp;



The 39-year-old President Bukele, who is known to break from the norms, said in the tweet that 62 out of 84 lawmakers voted in favor of the proposal. The country’s legislative assembly also tweeted about the approval of the new law with a matching 62 votes in favor.&nbsp;



Bitcoin as legal tender is only the first step on the way toward central bank digital currencies (<a href="https://cms.blockworks.co/feds-brainard-says-us-must-remain-on-frontier-of-cbdc-research/" target="_blank" rel="noreferrer noopener">CBDCs</a>), according to Roxe Inc. chief business officer Josh Li. “CBDCs will be a major catalyst for making crypto domestic and cross-border payments go mainstream. Why? With the right technology, CBDCs can not only make payments much faster and less expensive, but more interoperable between payment platforms and various financial institutions.” he said in an email to Blockworks on June 9.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The <a href="https://twitter.com/hashtag/BitcoinLaw?src=hash&amp;ref_src=twsrc%5Etfw">#BitcoinLaw</a> has been approved by a supermajority in the Salvadoran Congress. 62 out of 84 votes! History! <a href="https://twitter.com/hashtag/Btc?src=hash&amp;ref_src=twsrc%5Etfw">#Btc</a>🇸🇻&mdash; Nayib Bukele 🇸🇻 (@nayibbukele) <a href="https://twitter.com/nayibbukele/status/1402507224916836352?ref_src=twsrc%5Etfw">June 9, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Con 62 votos, el pleno legislativo aprueba la <a href="https://twitter.com/hashtag/LeyBitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#LeyBitcoin</a> con la que El Salvador adopta el <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> como moneda de circulación legal. ¡<a href="https://twitter.com/hashtag/LaNuevaAsamblea?src=hash&amp;ref_src=twsrc%5Etfw">#LaNuevaAsamblea</a> sigue haciendo historia! <a href="https://t.co/Ur9OQzPvYI">pic.twitter.com/Ur9OQzPvYI</a>&mdash; Asamblea Legislativa 🇸🇻 (@AsambleaSV) <a href="https://twitter.com/AsambleaSV/status/1402508029564760064?ref_src=twsrc%5Etfw">June 9, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



At the Bitcoin 2021 conference in Miami last week, President Bukele announced via a <a href="https://twitter.com/nayibbukele/status/1401327906178191366">video recording</a> that he had plans to send legislation to make bitcoin legal tender in El Salvador.&nbsp;



“In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy,” President Bukele said in the video on June 5.&nbsp;



Additionally, El Salvador’s central bank President Douglas Rodriguez said in an interview with state TV on June 8 that bitcoin is already being used in the country and “it’s not something people need to be afraid of,” but also said it won’t replace the US dollar.&nbsp;



The <a href="https://twitter.com/nayibbukele/status/1402446890466217985/photo/2">official document</a> President Bukele presented to The Legislative Assembly of The Republic of El Salvador said, “In order to promote economic growth of the nation, it is necessary to authorize the circulation of a digital currency whose value answers exclusively to free-market criteria, in order to increase national wealth for the benefit of the greatest number of inhabitants.”&nbsp;



The exchange rate between bitcoin and the US dollar will be freely established by the market, prices may be expressed in bitcoin and tax contributions can be paid in bitcoin, the legal document stated.&nbsp;



The law will take effect 90 days after its publication in the official gazette, the document said. There has been no official announcement on whether the newly approved law has been published in the gazette yet, however most gazettes are published every business day.&nbsp;



<h3 class="wp-block-heading">Latin America goes crypto&nbsp;</h3>



While El Salvador makes it official, other countries in Latin America are sharing similar support for the adoption of bitcoin as a legal tender, too.



Politicians from Brazil, Paraguay, Panama, Argentina and Mexico have expressed interest and support for the cryptocurrency.&nbsp;



A day after President Bukele’s video announcement for bitcoin legislation was broadcasted, Paraguayan Congressman Carlitos Rejala joined in as the first Latin American politician to express interest in adopting cryptocurrency after El Salvador.&nbsp;



Rejala <a href="https://twitter.com/carlitosrejala/status/1401712725886132224" target="_blank" rel="noreferrer noopener">said in a tweet</a>, “As I was saying a long time ago, our country needs to advance hand in hand with the new generation.” And then he said, “This week we start with an important project to innovate Paraguay in front of the world!”&nbsp;



The tweet was attached with a photo of Rejala with photoshopped laser eyes, indicating support for bitcoin.&nbsp;



Additionally, in a direct response to President Bukele’s tweets on June 7, Panamanian Congressman Gabriel Silva said, “This is important. And Panama cannot be left behind. If we want to be a true technology and entrepreneurship hub, <a href="https://twitter.com/gabrielsilva8_7/status/1401965129051389958" target="_blank" rel="noreferrer noopener">we have to support cryptocurrencies</a>.”&nbsp;



Congressman Silva added, “we will be preparing a proposal to present at the assembly,” but did not disclose details further.&nbsp;&nbsp;



<a href="https://twitter.com/FabioOstermann/status/1401988499893587968" target="_blank" rel="noreferrer noopener">Fabio Ostermann</a>, a State Deputy for Rio Grande do Sul of Brazil, and Federal Deputy of Brazil, <a href="https://twitter.com/gilson__marques/status/1402007277662523392" target="_blank" rel="noreferrer noopener">Gilson Marques</a> and <a href="https://twitter.com/IndiraKempis/status/1402129280830742531" target="_blank" rel="noreferrer noopener">Senator Indira Kempis</a> of Mexico City also posted pictures of themselves with laser eyes, indicating their independent support for bitcoin.&nbsp;



<h3 class="wp-block-heading">Iranian opposition to digital assets&nbsp;</h3>



Further away from Latin America, in the Middle East, Iranian President Hassan Rouhani took a different stance in regards to digital assets. Instead of sharing support, President Rouhani discussed the need to preserve and protect national interests in regards to activities in the field of digital currency and cryptocurrencies.&nbsp;



On June 8, President Rouhani said the <a href="https://www.president.ir/en/121560" target="_blank" rel="noreferrer noopener">risks of cryptocurrency trading must be considered</a> and said, “For legalizing the activity of cryptocurrencies and protecting people’s capital in this area, we must think of a solution as soon as possible and lay down and communicate the necessary laws and instructions.”



He also said, &#8220;The mining of cryptocurrencies is strictly prohibited until the end of summer, and the Ministries of Communication and Information Technology and Energy are responsible for cutting off power to these centres.”



In May, the country’s ministry of energy said due to increased domestic electricity use during the hot summers there is a nationwide ban on crypto mining until September and that crypto mining with civilian household electricity is not legal and home miners would pay heavy fines if discovered.