What are “vulture contracts” that affect Bitcoin mining in Paraguay?

A director of the Penguin mining company, Bruno Vaccotti, questioned the role of the National Electricity Administration (ANDE) and the Paraguayan government in a “story” in which he attacked illegal Bitcoin mining farms. In contrast, he warned about the agency’s lack of controls in the distribution of energy to the industry.

Vaccotti drew attention to a problem, which he named “vulture contracts”. This is a kind of agreement carried out by the WALK with companies for the sale of energy, but due to inefficiencies it causes damage to the activity and the country.

“We estimate that there are 300 megawatts of illegal installations, but there are also about 600 megawatts of ‘vulture contracts. It is a topic that no one is talking about.”

Bruno Vaccotti, Director of Political Affairs at Penguin.

According to Vaccotti, official contracts allow a certain amount of energy to be agreed upon with the mining company that signs it. The problem is that a relevant sector of these users fails to comply with the agreed energy agreement, and therefore, the contracts are not completed.

“We signed a contract for 100 megawatts for one year, which is then executed. In the last two years, contracts were closed for more than 900 megawatts – that is more than one turbine (of the Itaipú hydroelectric dam). Today not even 300 are in execution”, he illustrated in a radio interview.

For the sectoral reference, the regulatory authorities are not reviewing that energy sales contracts are being signed with unknown people or with little history in the activity, and that they then have no sanction for failing to comply with what was agreed.

“There is coming a ‘Juan de los Palotes‘ that no one knows, or who has a limited company 48 hours ago, signs a contract and then goes to speculate in their country of origin. Because, generally, they are foreigners. And they keep the contract,” he illustrated.

According to the Penguin manager, this unused installed capacity could be used by the rest of the companies that operate legally. And he believes that ANDE should behave more diligently in this control task.

“Why don’t they punish [a las empresas que incumplen los contratos]and they give him [energía] to any of the 50 mining companies that are complying? Bid, do what you want, but do something. Not only is a contract not being executed, Paraguay is also losing money because it has reserved energy,” he stressed.

So, based on what Vaccoti says, Vulture contracts are agreements that ANDE makes with companies for the sale of energy, but for various reasons they are not fully complied with. This represents a detriment to the activity and the country, since amounts of energy are agreed upon that are then not executed.

Many times, users fail to comply with what was agreed and do not receive any sanction from the regulatory authorities. Furthermore, in some cases, contracts are signed with unknown people or people with little history in the activity, who can then speculate and benefit from said contracts.

“Scapegoat”

As CriptoNoticias has been reporting, Paraguay is in the middle of a vast offensive against clandestine mining farms. With harsh criticism, Vaccotti maintained that these unauthorized networks are just a “scapegoat” and noted that “the government’s narrative is very wrong”.

“For example, ANDE says that it suffers losses of 2 million dollars due to illegal installations. I have a theory that he is a scapegoat. It is true that there are illegal installations, and we are the first interested in deactivating them. Why would we let someone be playing in black? As an industry we made ourselves available to the authorities with technology,” he noted.

However, Vaccotti suggested that this economic damage to ANDE includes other types of users and establishments, in addition to irregular miners: “I think that in that package of 2 million they are all: entire neighborhoods, and the traditional industries of yesteryear that also “They are hanging from the system.”

“ANDE has 28% loss of the energy it produces and markets. This is very serious, it is one of the most inefficient in South America“, complete.

The sectorial leader even minimized the losses generated by illegal mining. He pointed out that Penguin alone invoices ANDE about USD 850,000 per month for the purchase of energy. In addition, he reported that the installation of the company in the jurisdiction of Hernandarias, one of the places where there were State interventions, exceeded USD 100 million in investment.

“In other words, with 5 companies we are already supplying those USD 2 million that ANDE cries for. And add to that there are 45 more that are adding more value and building infrastructure,” he added.

In Paraguay, ANDE, Justice and control agencies are under scrutiny for suspicions of inefficiency and complicity with energy theft. As Criptonoticias reported, even a national senator, Basilio Nunez, drew attention to the curious fact that previous governments “They didn’t realize” what was happening.