The company operates customer-owned Bitcoin mining rigs on their behalf, taking a 15% commission for the service. Its new facility will be supplied with electricity by the Itaipu Dam, the largest hydroelectric dam in the country. Located on the border of Paraguay and Brazil, the structure has earned the Guinness World Record for most expensive object on earthwhich cost a whopping $27 billion to build in 1984, or $35 billion if inflation is taken into account.
Sazmining Chairman Kent Halliburton said Decrypt that due to Paraguay’s unique hydroelectricity production dynamics, that country was selling 5 gigawatts of electricity at a loss to its neighbor, Brazil. That’s why local authorities and communities accept the company’s presence, he said.
Operating the Itaipu Dam and buying their surplus electricity instead of exporting at a loss, “turns a headwind for Paraguay’s GDP into a tailwind,” Halliburton said.
Bitcoin mining is an integral part of the network, but has a somewhat controversial relationship with energy markets. Specialized computers, called ASICs, harness different power generation sources and run Bitcoin software in order to secure the protocol, thereby earning BTC.
The above means that the cost of energy is an important consideration for Bitcoin mining companies. According to Sazmining, mining costs at their new facility will be $0.047 per kilowatt hour at the new facility – a substantial difference between the world’s top Bitcoin mining country, the United States.
For comparison, the latest energy price report from the U.S. Bureau of Labor Statistics found that energy costs are $0.17 per kilowatt hour, although this can vary widely by location and sectors.
Halliburton said Sazmining is able to draw all of its electricity from the dam, meaning the new facility runs on 100% renewable energy.
Texas is often touted as one of Bitcoin’s strongest mining areas, with sophisticated programs to help the network in times of stress, but also to use their excess power. For Halliburton, Paraguay is on the verge of becoming “the new Texas”, but he admits that the network there is still much less developed than that of the solitary state.
This offers an advantage with a caveat, he said Decrypt. By accepting 95% power availability instead of 100%, he said, the company was able to take advantage of lower rates. That said, Halliburton is confident the network will continue to grow and import some of the programs currently in Texas. For example, Texas miners receive energy credits in exchange for shutting down their facilities during periods of high demand.
Paraguay, however, occupies a proverbial place in the overall mining sector. Since September 2021, the Cambridge Center for Alternative Finance (CCAF), placed Paraguay’s hash rate production at 0.15% of the entire Bitcoin mining network.
The Center has update its index earlier this year, but did not immediately respond to a request for Decrypt on its cartographic data.
The president of Sazmining, however, likes this figure.
“I see this as an opportunity for those of us who understand the dynamics of Paraguay,” he said, adding that they are positioning themselves ahead of “the seemingly inevitable rush of Bitcoin miners.”
Edited by Stacy Elliott.