The Pirates of Itaipu: How Illegal Bitcoin Farms Tapped Paraguay's Power Grid

The Pirates of Itaipu: Inside Paraguay's Illegal Bitcoin Mining Boom

On April 25, 2024, a joint team of state electricity technicians, prosecutors, and national police pulled onto a farm at kilometer 14 of the Monday highway, in Minga Guazú, eastern Paraguay. The property had a basic low-voltage connection, the kind any small agricultural business would need. But according to Paraguay's state utility, ANDE, behind that modest metered supply sat a second, secret connection: a direct tap into the medium-voltage grid, a hidden 1,000-kilovolt-ampere transformer, roughly 300 meters of cable, and 476 machines mining bitcoin around the clock. ANDE technicians calculated the farm was draining about G. 270 million (roughly US$36,000) worth of electricity every month.

More than two years later, in June 2026, a Paraguayan sentencing tribunal convicted two men over that operation, Cristian Daniel Jara Villalba as author and Ramón Martínez Morínigo as co-author of illegal electricity extraction, and handed them two years in prison. The sentence was suspended, so neither man will serve time unless he reoffends. Yet ANDE called the ruling a landmark, because Martínez Morínigo was not the operator of the mine. He was the meter holder, the legal customer at the property, and the court found he could not prove he had no idea what was running on his land. ABC Color reported that the decision established a principle the utility has pressed for throughout its years-long crackdown: liability now reaches those who "facilitate, permit, or benefit" from power theft, not just the people who splice the wires.

One case, 476 machines, roughly US$36,000 a month in stolen power. Scale that pattern out across dozens of similar farms raided across Paraguay, and the questions multiply: how do criminal bitcoin operations tap a national grid by the megawatt, how much power are they actually taking, and can the state stop them before the grid itself runs short?

The grid that miners came for

Paraguay is one of the very few countries whose electricity system runs almost entirely on renewable power. Its three hydroelectric plants, anchored by Itaipu on the Paraná river, supply effectively all of a nation of about 7 million people. Itaipu, built with Brazil under a 1973 treaty and shared equally between the two countries, is one of the largest power stations on Earth, with 14,000 megawatts of installed capacity across 20 generating units. In 2016 it produced a record 103.09 million megawatt-hours, enough electricity to meet all of Paraguay's needs for seven years.

Here is the paradox at the center of the story. Paraguay cannot use anything close to its half of that output. Its transmission lines are old, its industrial base is small, and so it cedes most of its entitlement to Brazil. As of 2022, Brazil consumed roughly 85 percent of the dam output allocated to Paraguay, bought at treaty prices that many Paraguayans regard as insulting. "There's an extraordinary surplus, which Brazil is buying at a laughable price," Gregorio Bareiro, a miner in the border city of Ciudad del Este, told Rest of World in 2022, echoing a grievance that runs through the country's politics. Yet this land of surplus still fights frequent energy cuts, and 23 percent of households still cook with wood or charcoal, a share that nearly doubles in rural areas, according to AFP reporting from 2024.

Cheap, legal, green electricity proved irresistible to a very specific industry. Bitcoin mining is an industrial brute-force lottery: specialized computers called ASICs, or application-specific integrated circuits, grind through trillions of calculations per second in a contest to validate blocks of bitcoin transactions and earn the associated reward. Unlike a laptop or a data center doing many jobs, an ASIC does exactly one thing, and it does it at full load, every hour of every day, converting electricity into heat and digital currency. The documented loads from Paraguayan raids work out to roughly 3 kilowatts per machine before cooling. One farm seized in Hernandarias in August 2024 was drawing 2,151 kilowatts across 693 units, and a farm raided in Salto del Guairá in May 2024 ran 2,738 processors behind transformer capacity totaling 7,150 kVA.

A mining farm, in electrical terms, behaves like a small town that never sleeps. Operators know this. Legal investors poured in: more than 60 mining sites were established in Paraguay in just three years, representing more than US$1.1 billion in investment, Bruno Vaccotti, spokesman for Penguin Group, told AFP in 2024; Penguin built a soccer-field-sized, renewables-only data center near Itaipu. The cottage version arrived even earlier. In Villarrica, a city that retains its own private power company, CLYFSA, a court victory kept tariffs at "special" rates from roughly US$16 per megawatt-hour, a price a local advisor described to Rest of World as possibly "the cheapest energy in the Americas." By the same advisor's 2022 estimate, home miners with spare rooms and gaming PCs had been joined by roughly 30,000 ASICs in the town, about two for every household.

ANDE, for its part, earns real money from the legal side of the industry. Jimmy Kim of the Digital Assets Mining Chamber of Paraguay (Capamad) told AFP in 2024 that the utility takes in about US$12 million a month from crypto miners, while charging them more than 50 percent above the conventional rate. When tariffs for high-consumption customers rose again that year, legal operators complained of lost predictability. "Our companies are looking at Brazil," Kim said, because "there is no legal security" in Paraguay.

And beside the licensed, metered, taxed version of the boom grew a shadow version that paid for little of it, or none of it at all.

How a mining farm steals from the grid

The raid files accumulated by ANDE and the Public Prosecutor's Office describe two core techniques, plus a third that exists somewhere between method and cover story.

The first is the direct tap. Medium-voltage distribution lines run through rural Paraguay at tens of thousands of volts, far above what a wall socket delivers. An illegal operator with a transformer and a few hundred meters of cable can hang a private substation on that backbone and step the power down to feed thousands of machines, with no customer account and no meter in the loop at all. The Salto del Guairá operation uncovered on May 28, 2024, the largest of its kind that ANDE had registered, worked exactly this way: a direct, unmetered medium-voltage connection feeding 2,738 mining units through five distribution transformers, which ANDE estimated was causing monthly losses of G. 1.096 billion, on the order of US$145,000. Prosecutors there filed charges under Article 173 (illegal extraction of electricity), Article 218 (disruption of a public service), and Article 274 (sabotage) of the Penal Code.

The second technique is subtler: keep the meter, but make it lie. In the Hernandarias farm raided in August 2024, inspectors using the utility's SCADA remote-monitoring network found that the metering equipment had been tampered with so that it registered only 749.5 kilowatts of a true load of 2,151 kilowatts. The operator was paying for about a third of its power, cutting its operating costs by roughly 65 percent and costing ANDE an estimated US$60,000 a month.

The third method is simpler and older: someone on the inside, or at least someone on the paperwork, decides not to ask questions. Meter holders rent warehouses or rural lots to miners and then profess ignorance when the transformer is discovered. That is precisely the arrangement the June 2026 Minga Guazú conviction targeted. ANDE's statement after the verdict said the ruling "sets a powerful precedent by establishing that justice will reach not only those who carry out illegal connections but also those who facilitate, permit, or benefit from actions that compromise the national electricity system." The utility reaffirmed a "zero-tolerance policy" against illicit connections. ABC Color and Bitcoin.com News both documented the case.

Detection, meanwhile, has become a technical arms race the utility is visibly investing in. SCADA systems on distribution feeders flag when a line segment is carrying more energy than its billed customers can explain. ANDE says artificial-intelligence software analyzing feeder behavior led it to the Salto del Guairá farm; the Hernandarias meter tampering surfaced through the same SCADA monitoring layer. In a March 2026 release, the utility described surveillance drones for georeferenced line surveys delivered in 2024, clamp meters and electrical recorders issued to field crews in 2025, shielded medium-voltage metering with remote reading worth US$445,000, and a dedicated Electricity Loss Monitoring and Control Room costing G. 5.1 billion, alongside AI analytics on medium-voltage feeders.

Does illegal mining really consume a third of Paraguay's power?

Here the record demands a correction, because a figure circulating in coverage of this crisis has outrun the evidence.

The raw number exists. In 2024, ANDE conceded publicly that it lost almost a third of all the electricity it produced, but it was careful, in the same breath, to say those losses were not exclusively attributable to illegal crypto mining. Utility "losses" in this accounting combine two very different categories: technical losses (energy dissipated in lines and transformers) and commercial losses (every kind of theft and non-payment, from informal households to tampered industrial meters). In its March 2026 report, ANDE put distribution losses at 23.4 percent in 2023, falling to 20.03 percent by 2025, and total system losses, including transmission, at 28.5 percent in 2023, falling to 24.5 percent in 2025.

So "a third of Paraguay's power" was, at worst, every loss of every kind across the whole network, not the consumption of clandestine bitcoin farms. What, then, is the documented crypto footprint? ANDE says that across 2024 and 2025 it shut down 37 illegal mining farms with a combined installed capacity of 91.8 megawatts, preventing ongoing losses of more than G. 18.6 billion a month, roughly US$2.5 million. ABC Color has separately reported the utility's tally of US$20.2 million in cumulative damage from 36 clandestine crypto mines. Penguin's Vaccotti, speaking for the legal industry, has put the monthly cost of crypto-related theft at nearly US$3 million.

Set 91.8 megawatts against the system the miners are tapping. Itaipu alone has 14,000 megawatts installed; the documented illegal farms amount to about two-thirds of one percent of that single dam's nameplate. Undiscovered farms push the true figure upward, and measured against what Paraguay actually consumes domestically rather than what its dams generate, the share would look larger. But nothing in the public record supports a claim that criminal miners are draining a third, or anything close to a third, of national generation. The truth is more specific and, in a way, harder on the country's institutions: a meaningful slice of a grid that already loses a quarter of its power is being stolen by sophisticated industrial operations, and much of the rest is being lost to the same weak distribution system that lets them hide.

That weakness cuts both ways. Not every suspicious farm is a theft. In November 2024, ANDE and prosecutors raided a crypto farm in rural Natalio, in Itapúa department, over a suspected illegal power draw; technicians measured the load, found consumption within the limits of the site's contract, and left the operators with a 48-hour notice to complete their administrative registration.

The crackdown, and the sentences that never happen

The state's response has stiffened on paper at a striking pace. In July 2024, Paraguay's Senate passed a law raising the maximum sentence for energy theft to ten years. The resulting statute, Law 7300/2024, also permits asset seizures, and ANDE has leaned on it heavily: by August 2024, director Félix Sosa said the utility had opened criminal proceedings in 71 cases and seized some 10,000 computers and 50 transformers. Between 2024 and 2025, inspectors checked more than 62,000 supply points nationwide.

The convictions, when they come, are real but strangely weightless. In 2023, courts convicted Edgar Saavedra and Rodrigo Suares of stealing energy for mining, handed them two-year sentences, and suspended them. In August 2024, crypto farm owner Carlos Raúl Rojas was sentenced to 18 months for a scheme that cost ANDE more than US$1.5 million; and in June 2026 came the suspended two-year terms in the Minga Guazú case. A pattern is visible: prosecutors win, papers are signed, machines are seized, and the convicted tend to walk free on suspended sentences. The ten-year ceiling written into Law 7300 has so far remained a threat rather than a consequence. ANDE, to be fair, is playing a longer institutional game, using each conviction, especially the facilitator-liability ruling, to make the next raid easier to prosecute than the last.

Who protects the mines?

The question hanging over all of this is the one Paraguayan politicians ask each other in public: who lets farms the size of small towns stay invisible?

Opposition politician Salyn Buzarquis has accused government officials of sheltering illegal mines in exchange for bribes. "Why don't they discover more?" he asked in a 2024 interview with AFP. "They are easy to detect," he added, because an industrial mining farm "consumes the equivalent of what a whole city consumes." The deputy mining minister at the time, Mauricio Bejarano, conceded a "serious struggle" against power theft, and legal operators like Penguin complain, in the softer language of disappointed investors, that the state is not doing enough.

What the public record does not yet contain is a court-tested picture of the alleged infrastructure behind the farms. No prosecution documented in the sources above has established a cartel structure, named financiers, or convicted an ANDE or municipal insider for enabling connections. Bribery remains an allegation, not an adjudicated fact. And on the other end of the pipeline, the destination of the mined bitcoin is simply undocumented in the public record: mining rewards flow to addresses controlled by the operators or their pools, and no Paraguayan case file published to date traces them further. Claims of organized laundering rings may eventually prove out, but as of August 2026 they are beyond what the evidence supports.

Is the grid heading for a blackout?

The darkest forecast attached to this story, that illicit mining could push Paraguay toward a national blackout crisis by 2029, has the same problem as the one-third figure: no such projection appears in any official report, utility filing, or documented analyst assessment in the public record reviewed here. What the record shows instead is a grid under strain from less cinematic causes.

Brazilian energy news service BNamericas reports that national electricity consumption grew 19.4 percent through May 2026, an extraordinary pace for a country whose cheap, treaty-bound electricity is largely spoken for by its giant neighbor. The binding constraints look like this: Paraguay cedes most of its Itaipu entitlement abroad, its own distribution network is under-maintained, demand at home is climbing fast, and every illegal tap degrades local service quality for paying customers in the process, a harm ANDE cites in its raid announcements. That is a fragility story about investment, pricing, and governance, and illegal mining aggravates it. It is not a story of a dam running dry.

Paraguay is not the first country to learn this lesson the hard way. Iran has repeatedly blamed both licensed and unlicensed miners for summer blackouts and imposed seasonal mining bans, with authorities reporting seizures of thousands of unlicensed machines over several years. Kazakhstan's grid buckled under the strain after miners fleeing China's 2021 ban poured across the border, forcing the government into emergency restrictions and a licensing regime. Venezuela's state utility has confiscated mining rigs by the thousands amid corruption scandals and chronic outages. In each case the pattern rhymes with Paraguay's: ultra-cheap or subsidized power, a distribution system with room to hide, and an enforcement wave that arrives only after the theft becomes politically visible.

What's left to settle

Back in Minga Guazú, the 476 machines are gone, the transformer dismantled, the cable pulled out, and the two convicted men are free on suspended sentences. ANDE is, by its own reported numbers, winning the measurable fight: total losses down from 28.5 to 24.5 percent in two years, 37 illegal farms closed, more than 18.6 billion guaraníes in monthly theft prevented.

What remains unsettled are the levers that created the opening. Legal miners say rising tariffs and unpredictability are pushing the industry toward exits like Brazil. Courts convict operators but, so far, rarely jail them. The alleged officials who, critics say, take bribes to look away have faced no documented daylight. And the deepest paradox of all persists: Paraguay owns half of one of the mightiest power plants ever built, sells most of that share to Brazil, loses a quarter of what it keeps, and convicts while mostly declining to jail the people who noticed the gap first.

Whether the next phase is written by the Loss Monitoring and Control Room, by the sentencing tribunals, or by another warehouse at kilometer 14 depends on whether the state can make facilitation as costly as the theft itself. For the first time, in June 2026, a court said it could.

Sources / References

• ABC Color (Silvana Bogarín), "Criptominería ilegal: ANDE logra condena para responsables de millonario robo de energía," June 20, 2026. https://www.abc.com.py/economia/2026/06/20/criptomineria-ilegal-ande-logra-condena-para-responsables-de-millonario-robo-de-energia/
• Administración Nacional de Electricidad (ANDE), "Continúa la mayor intervención de criptominería con conexión directa en Media Tensión registrada en el país," May 29, 2024. https://www.ande.gov.py/interna.php?id=12334
• BNamericas (ANDE press release), "ANDE has achieved a significant reduction in its electricity losses over the past two years," March 20, 2026. https://www.bnamericas.com/en/news/with-strategic-actions-and-technological-innovation-ande-has-achieved-a-significant-reduction-in-its-electricity-losses-over-the-past-two-years
• Bitcoin.com News, "National Power Administration of Paraguay Seizes 693 Miners in Illegal Bitcoin Mining Operation," August 23, 2024. https://news.bitcoin.com/national-power-administration-of-paraguay-seizes-693-miners-in-illegal-bitcoin-mining-operation/
• Bitcoin.com News (Sergio Goschenko), "Paraguay Convicts Two Bitcoin Miners to Jail Sentences for Large-Scale Energy Theft," June 22, 2026. https://news.bitcoin.com/paraguay-convicts-two-bitcoin-miners-to-jail-sentences-for-large-scale-energy-theft/
• Diario HOY, "Allanan granja minera de criptomonedas en Itapúa por uso sospechoso de energía," November 28, 2024. https://www.hoy.com.py/nacionales/2024/11/28/allanan-granja-minera-de-criptomonedas-en-itapua-por-uso-sospechoso-de-energia
• RFI / AFP, "Paraguay's abundant hydropower draws crypto miners, legal and not," August 29, 2024. https://www.rfi.fr/en/international-news/20240829-paraguay-s-abundant-hydropower-draws-crypto-miners-legal-and-not
• Rest of World, "How one of South America's biggest dams became a Bitcoin battleground," 2022. https://restofworld.org/2022/paraguay-bitcoin-dam/