Paraguay Turns Seized Miners Into a State Bitcoin Drive
- ANDE and Morphware will test state mining with 1,500 seized rigs at utility-run sites.
- Paraguay aims to convert spare hydropower into Bitcoin and stronger public revenue.
- Officials now debate instant BTC sales or hedging output to steady state income.
Paraguay’s state electricity monopoly, Administración Nacional de Electricidad (ANDE), has signed a Memorandum of Understanding with Morphware to explore a government-led Bitcoin mining program powered by seized equipment and surplus hydroelectric energy. The agreement creates a framework for regulated mining operations that could convert unused electricity into digital assets while authorities test how confiscated machines perform under state control.
Officials plan to redeploy 1,500 seized Bitcoin mining machines during the program’s first phase at ANDE-controlled facilities. The machines come from illegal mining operations that authorities shut down across the country.
The partnership positions Morphware as a technical and advisory partner for the initiative. The company will help guide the structure of regulated mining activities and operational strategy. The proposal follows a series of government actions against illegal miners accused of stealing electricity or misrepresenting their business activity to secure lower power tariffs.
Morphware founder and CEO Kenso Trabing described the scale of the confiscated equipment held by authorities. “They’re literally stacked to the ceiling,” Trabing said while describing government warehouses filled with idle mining machines.
The pilot program aims to bring a portion of those machines back into operation under government oversight. But a central question now shapes the discussion inside Paraguay’s government: how should the country manage the Bitcoin it produces?
Seized Mining Machines Form the Program’s Foundation
Authorities built the initiative around equipment seized during enforcement actions against unauthorized mining operations. Investigators discovered that some operators allegedly stole electricity, while others registered under unrelated business categories to secure cheaper power rates.
As a result, authorities confiscated thousands of machines during raids conducted in several regions. The government now holds a large inventory of mining hardware in storage facilities. Trabing said authorities stored the equipment in warehouses after removing it from illegal sites.
“They’re literally stacked to the ceiling,” he said, describing the scale of the seized machines. Under the pilot program, ANDE will install 1,500 units from this inventory at facilities it controls. Officials view the test phase as a way to assess operational efficiency before expanding the program. Government discussions also include the possibility of repurposing up to 30,000 confiscated mining rigs if the pilot succeeds.
Hydroelectric Surplus Drives the Strategy
Paraguay has become an attractive location for Bitcoin mining because it produces large volumes of low-cost hydroelectric energy. Much of that electricity comes from the Itaipu Dam, one of the world’s largest hydroelectric projects.
The country generates far more power than its domestic demand requires. As a result, Paraguay exports a significant share of its electricity to neighboring Brazil.
Officials now see Bitcoin mining as a way to monetize energy that might otherwise remain underused. Mining operations require constant electricity consumption. Therefore, they can operate effectively where power remains abundant and inexpensive.
Authorities believe converting surplus electricity into Bitcoin could generate new state revenue streams. The approach would shift Paraguay from simply exporting excess power toward producing digital assets using the same energy supply. At the same time, officials plan to ensure that mining operations do not disrupt domestic electricity availability.
Related: Tether Launches MiningOS to Open Bitcoin Mining Infrastructure
Government Debates Bitcoin Sales and Risk Management
Officials within Paraguay’s government continue to debate how the country should handle Bitcoin produced through the program. Some policymakers support selling mined Bitcoin immediately to finance public programs.
Those proposals include using revenue to support social security, education, and infrastructure spending. Others inside government agencies have discussed retaining part of the mined Bitcoin.
They have also considered managing price exposure through financial markets. Morphware has proposed a conservative approach based on derivatives markets. Trabing said the company discussed selling Bitcoin futures on U.S. exchanges to hedge production and stabilize revenue.
The firm also advised against allowing government agencies to custody Bitcoin directly. Paraguay has experienced major cybersecurity incidents in recent years, including a ransomware attack that compromised systems across multiple ministries.
As discussions continue, the MOU marks the first structured step toward evaluating whether state-managed Bitcoin mining can turn Paraguay’s unused hydroelectric power into a regulated digital asset industry.
