Paraguay, home to Jesuit ruins, rainforests and the world’s largest dam, will soon also be home to what is being touted as the world’s largest cryptocurrency mining center and exchange, which will be powered by the massive, state-owned Itaipú hydroelectric dam under a 15-year contract.
Itaipú, which cost $17.4 billion to construct and has a total capacity of 14 GW across its 20 units, will supply five cryptocurrency mining centers to be built in Ciudad del Este under the terms of an agreement between South Korean blockchain venture the Commons Foundation and a company called Sisay.
Christened the “Golden Goose,” the project has the blessing of the Paraguayan government, which is providing five plots of land for the mining centers and their ancillary infrastructure and is aiming to give the cryptocurrency miners tax breaks.
"The Paraguay government will actively support the Commons Foundation's 'Golden Goose project' and provide tax breaks through constitutional revisions," said Hugo Velázquez Moreno, vice president of Paraguay, in a statement.
The Itaipú hydro facility itself is owned by the governments of Paraguay and Brazil but most of its output is consumed in the larger of the two countries, with the Paraguayan government selling most of its portion of the generation across the border.
“Only 10 to 20 percent of electricity is produced at Itaipu hydroelectric plant and consumed in Paraguay,” said Choi Yong-Kwan, chairman of the Commons Foundation, in a statement. “More than 80 percent of its electricity is exported overseas. We will build the world's largest mining centre in Paraguay using low-cost and abundant clean energy."
Cryptocurrency mining is the process by which blockchain transactions are verified and the network is regulated by pools of miners computing hashing algorithms—a very energy intensive process—in exchange for a small portion of cryptocurrency rewards.
The blockchain behind Bitcoin (BTC)—the most well-known of the many proliferating tokens being mined—was burning through about 2.55 GW as of May, almost the total consumption of Ireland, according to an article published in energy journal Joule by Alex de Vries, senior consultant and blockchain specialist at PwC in the Netherlands.
It is no wonder, then, that the surplus of cheap electricity generated by the Itaipú dam has made Paraguay a cryptocurrency miner's paradise and resulted in thousands of crypto mining rigs springing up in the country.
Participants in the Golden Goose project will receive 30% of the mining profits and 70% of the cryptocurrency exchange profits, all in the form of MicroBitcoin (MBC) tokens, which utilize Bitcoin’s blockchain protocol.
The foundation plans to conduct pre-sales of MBC, BTC and Ethereum (ETH) tokens to bolster participation in the project, as well as an initial exchange offering.
The MBC tokens that the Golden Goose intends to utilize were trading at three hundredths of a cent at press time, and are currently ranked 1,755th out of the 2,080 cryptocurrencies listed by capitalization on Coin Market Cap.
It remains to be seen whether Blockchain's “Golden Goose” will lay any golden eggs.