The Paraguayan state electricity company signs an agreement with Morphware to launch the first government Bitcoin mining program using thousands of seized miners.
The Administración Nacional de Electricidad (ANDE), Paraguay’s state electricity monopoly, has signed a Memorandum of Understanding (MOU) with Morphware to launch a government Bitcoin mining program. The project is based on the repurposing of thousands of miners confiscated from illegal operations and the use of untapped hydroelectric energy.
At the heart of the agreement is a growing stockpile of miners seized by Paraguayan authorities during operations against operators accused of electricity theft or fraudulent registration as other types of businesses to obtain subsidized energy rates. Kenso Trabing, founder and CEO of Morphware, described government warehouses as filled with idle machines. The pilot phase of the program calls for the repurposing of 1,500 of the confiscated miners at ANDE-controlled sites.
Paraguay has become a prime destination for Bitcoin miners in recent years due to its abundance of low-cost hydroelectric energy, largely generated by the Itaipu dam and exported to Brazil. However, the rapid influx of operators has fueled widespread abuse of the electrical grid, with many illegally connecting to the network or misclassifying their operations to avoid industrial tariffs. The resulting enforcement actions led to large-scale seizures, leaving the government with tens of thousands of machines and no plan for their use.
Under the terms of the agreement, ANDE will retain ownership and operational oversight, while Morphware will provide training, operational guidance, and technical expertise. “They have no experience in Bitcoin mining,” said Trabing. “Our role is an advisory one.” The company will help ANDE convert existing utility buildings into mining facilities, many of which are already adjacent to electrical substations and can be repurposed through wall removal, ventilation installation, and the addition of transformers, distribution units, and metering equipment.
A central issue still under discussion concerns the management of the bitcoins produced. Trabing reported that debates are ongoing within government agencies: some officials advocate the immediate sale of bitcoins to fund public programs such as social security, education, and infrastructure; others have proposed holding a portion of the bitcoins or managing price risk through financial markets. Morphware has recommended a conservative derivatives-based approach, suggesting the sale of BTC futures on U.S. exchanges as a tool to hedge production and stabilize revenues. The company has also advised against entrusting direct Bitcoin custody to government agencies, citing the cybersecurity breaches Paraguay has suffered in recent years, including a ransomware attack that compromised the systems of multiple ministries.
The project is part of a broader vision for the use of the country’s surplus energy. Paraguay consumes only a fraction of the energy it produces, selling the rest abroad at relatively low rates. “When you do the math, it’s very straightforward,” said Trabing. “You’re selling electricity for a fraction of what it can earn if you use it locally.” If the pilot program proves effective, Paraguay could finance new miners through structured financial products tied to future Bitcoin production, without relying solely on seized hardware. “This is the future of midstream electricity management,” Trabing concluded. “Grids that don’t just distribute energy, but hold a stake in the digital infrastructure they enable.”
