Crypto cowboys have found paradise in Paraguay

The country is used to drug busts and bank heists. But the hooded gunmen who recently burst into a warehouse in Minga Guazú, in Paraguay’s rural east, weren’t after cocaine, weed or cash. Instead they sped off with 150 sophisticated computers that had been secretly hooked up to the grid. The shaken caretaker called the police. But when they came, he declined to reveal who owned the clandestine bitcoin-mining operation.

In recent years, Paraguay has become a mecca for bitcoin miners. So-called “cryptocurrency farms” are springing up inside disused factories, half-finished tower blocks, and containers on cattle ranches. Paraguay’s taxes are ultra-low, its politics are predictable, and the necessary gadgets can be imported inexpensively, explains Fernando Arriola of the Paraguayan Fintech Chamber, a lobby group. In addition, the legal system is rackety and, above all, the country has cheap electricity to burn. Though poor, small in population and short of manufacturing, Paraguay owns half the output of Itaipú, a colossal hydroelectric dam it shares with Brazil. Miners are allowed to use this spare power to generate digital assets like bitcoin, provided they pay a set tariff to ANDE, the state energy firm. Some 50 companies do so.