Paraguay to Harness Seized Mining Rigs for Bitcoin Production

Paraguay's national electric company, Administración Nacional de Electricidad (ANDE), has officially partnered with the infrastructure firm Morphware. This collaboration aims to establish a government-managed Bitcoin mining initiative utilizing a significant number of confiscated mining equipment and abundant surplus hydroelectric power.

Key Takeaways

Paraguay's ANDE has partnered with Morphware to initiate a government-run Bitcoin mining program.
The program will utilize about 30,000 seized mining rigs and excess hydroelectric power from the Itaipú dam.
Morphware will primarily provide technical advice, as ANDE lacks experience in Bitcoin mining operations.
This initiative follows crackdowns on illegal mining practices within the country.
Other nations, like El Salvador and Bhutan, are also exploring state-led strategies for Bitcoin mining.

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Overview of the Initiative

In a groundbreaking move, Paraguay's state-run power company is set to venture into Bitcoin mining. ANDE has reached a formal agreement with Morphware to create a state-owned mining program leveraging two key resources available in the country: confiscated mining rigs and inexpensive hydroelectric energy generated by the Itaipú dam.

Under this arrangement, ANDE will oversee and manage the mining operations. Instead of exporting excess energy at low, treaty-mandated prices, the utility will divert part of this power to Bitcoin mining operations that it controls. Morphware will serve as a technical advisor, since ANDE lacks experience in Bitcoin mining. The founder and CEO of Morphware, Kenso Trabing, explained that their role will primarily be advisory.

The initial phase will involve activating approximately 1,500 confiscated miners within existing utility buildings located near substations. These sites can be transformed into rudimentary mining facilities equipped with ventilation systems, transformers, distribution units, and proper metering.

This initiative follows a series of nationwide crackdowns initiated in early 2024, during which ANDE targeted unmetered and illegal high-voltage connections utilized by unauthorized miners. The majority of the confiscated machines were seized between May and June of 2024, as authorities intensified their inspections in areas known for illegal mining activities.

For instance, in Salto del Guairá alone, ANDE confiscated 2,738 mining rigs after uncovering an unmetered high-load connection responsible for approximately 1.1 billion guaraníes (around 146,000 USD) in stolen electricity each month. This, along with numerous similar operations, has brought the total stockpile of seized ASICs close to 30,000 units.

A Growing Trend in State-Led Bitcoin Mining

Paraguay's decision aligns with a small but increasing number of states that are exploring the conversion of energy policy into Bitcoin hash rate. El Salvador has already integrated Bitcoin into its official economic strategy, channeling geothermal energy from state-owned plants to mining operations and accumulating Bitcoin in a government-controlled stockpile alongside its “volcano bond” initiatives, as reported by our affiliate site Bitcoinist. Meanwhile, Bhutan has been quietly running hydro-powered mining operations since at least 2019, using surplus energy from its dams to build Bitcoin assets on its balance sheet and to support new digital asset and “mindfulness city” projects.

The ANDE-Morphware collaboration represents a hydro-rich, Latin American take on this emerging trend: maintaining domestic energy usage, owning the related infrastructure, and allowing the state—not just private miners—to reap the rewards.

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