Paraguay emerged as an attractive hub for Bitcoin (CRYPTO:BTC) mining due to its abundant and cheap hydroelectric power, especially after China's mining ban in 2021.

However, recent actions against illegal mining operations, including electricity fee hikes of 14%, have soured the country's appeal.

These moves have led to over $400 million in capital flight as mining companies withdrew investments.

Despite recognising the inability to replace Bitcoin mining revenue immediately, the Paraguayan government continues to pursue policies that undermine the industry's role in its economic strategy.

This stance is viewed negatively, potentially leaving Paraguay without viable alternatives to absorb excess electricity capacity.

The situation underscores the challenges of balancing regulatory actions with economic opportunities in cryptocurrency markets.