The Paraguayan city of Hernandarias has become a focal point for the rapidly expanding crypto mining sector, driven by the country’s abundant and affordable hydropower. This surge in activity, however, has drawn both legitimate and illegal miners, creating a complex landscape of opportunity and challenge.
At the heart of this burgeoning industry is a data center, sprawling across an area equivalent to a soccer field, packed with rows of supercomputers. Operated by local firm Penguin Group, this center is located near the Itaipu hydroelectric power plant on the Parana River, one of the world’s largest sources of renewable energy. The facility’s operations, powered entirely by green electricity, highlight Paraguay’s potential to become a major player in Latin America’s technology sector.
Penguin Group, in collaboration with a US partner, has invested heavily in its Hernandarias site, which is dedicated to Bitcoin mining, artificial intelligence training models, and cloud services. The company envisions Paraguay as “Latin America’s tech hub,” capitalizing on the country’s vast hydropower resources. Over the past three years, more than 60 crypto mining sites have sprung up across Paraguay, representing over $1.1 billion in investments, according to Penguin spokesperson Bruno Vaccotti.
However, the influx of illegal crypto miners, who siphon off power without authorization, poses a significant threat to both the industry and the country’s energy infrastructure. This month, police and officials from the state-owned Ande utility company dismantled a large illegal crypto mining operation near Hernandarias, capable of diverting approximately $60,000 worth of electricity per month. Nearly 700 computers and a transformer were confiscated, though the duration of the operation remains unclear.
The problem is not new. In May, authorities seized 2,700 computers and five transformers in Saltos del Guaira, marking the largest crackdown on illegal crypto mining in Paraguay to date. Ande has admitted that it loses almost a third of the power it generates, with illegal crypto mining being a significant contributor. Vaccotti estimates that these losses amount to nearly $3 million per month.
The impact of these illegal operations is particularly concerning in a country where 23 percent of households still rely on wood or charcoal for cooking, despite Paraguay boasting some of the lowest electricity prices in Latin America. Rural areas suffer even more, with this figure nearly doubling. Moreover, despite being a net exporter of electricity, Paraguay’s population frequently endures energy cuts due to poor maintenance and underinvestment in the national grid.
Opposition politician Salyn Buzarquis has accused government officials of turning a blind eye to illegal crypto mines in exchange for bribes. “Why don’t they discover more (illegal mines)?” Buzarquis asked in an interview with AFP. “They are easy to detect as they consume the equivalent of what a whole city consumes in electricity.”
Ande director Felix Sosa has insisted that the utility is doing everything possible to combat electricity theft, with criminal proceedings initiated in 71 cases and the seizure of some 10,000 computers and 50 transformers. Deputy Mining Minister Mauricio Bejarano has described the crackdown as a “serious struggle,” noting that the Senate recently passed a law increasing the maximum sentence for energy thieves to 10 years in prison.
Despite these efforts, companies like Penguin Group express frustration with the government’s response, citing a lack of “predictability” and a recent increase in energy prices for high consumption users. Jimmy Kim, representing Paraguay’s Digital Assets Mining Chamber (Capamad), revealed that the crypto mining industry generates around $12 million a month for Ande, yet the sector faces charges over 50 percent higher than the conventional rate. “Our companies are looking at Brazil,” Kim warned, pointing to the absence of legal security in Paraguay.
