Brazil — A Green Giant in Search of a Digital Profile: Hydropower, Sugarcane Mining, and DREX | SforNews

BRAZIL — A GREEN GIANT IN SEARCH OF A DIGITAL PROFILE

Diagnosis of the Old Model and Its Place in the New Energy-Digital System

INTRODUCTION: A BRIEF DIAGNOSIS

Brazil is the greenest point on the map of the new energy-digital system. It is a country that issimultaneously:

Brazil’s paradox: a country with one of the cleanest energy systems in the world and enormous mining potential remains on the periphery of global hashrate. Its main obstacle is not energy, but infrastructure: generation outpaces transmission, and during peak hours, solar and wind farms are simply disconnected from the grid [1].

Brazil is not aggressively building a new system like China, nor is it forced to build one for survival like Iran. It is experimenting — with DREX, with sugarcane-powered mining, with Pix integration and tokenization [2][6].

SECTION 1. THE OLD MODEL: WHAT EXISTED, WHAT BROKE

Brazil’s economic model of recent decades was built on three pillars:

This model works, but it is faltering.

The energy system paradox. Brazil generates more clean energy than most countries in the world: the cascade of hydroelectric plants — Itaipu, Belo Monte, Tucuruí — produces enough electricity for an entire mid-sized country [15]. However, generation outpaces transmission. During peak solar and wind generation hours, large power plants are forced to disconnect from the grid [1].

A new mining model. This is where the solution emerged. Instead of waiting for grid modernization, mining companies negotiate directly with generators. The economics are not based on a fixed electricity price, but on a profit-sharing agreement: miner and generator jointly capitalize the project and maximize the value of each MWh produced that would otherwise be lost [1].

The map (clean energy, hydro potential, agribusiness) has ceased to reflect the territory (overloaded grids, renewable curtailments during peak hours, insufficient transmission investment) [1][8].

SECTION 2. ENERGY PROFILE: WHAT EXISTS, WHAT IS MISSING

Brazil is an energy giant, but with structural problems [15].

What exists	What is missing
The world’s largest hydropower cascade (Itaipu, Belo Monte, Tucuruí) [15]	Sufficient transmission capacity during peak hours [1]
Rapidly growing solar and wind generation [1]	Flexible grid infrastructure (renewable curtailments during peak hours) [1]
Enormous biofuel potential (sugarcane, bagasse) [6][11]	Investment certainty in transmission (dependent on NDB) [8][13]
Developed regulatory system and payment infrastructure (Pix) [2]

Key fact: Brazil generates more clean energy than most countries in the world, but its grids cannot keep pace with generation. During peak solar and wind generation hours, large stations are disconnected from the grid [1]. This creates a unique opportunity for mining: monetizing energy that would otherwise be lost.

New element: BRICS financing. In January 2026, Brazil’s Energy Minister stated that the New Development Bank (NDB) is a key partner for financing energy infrastructure [13]. In April 2026, the NDB confirmed its participation in the largest Capacity Reserve auction in the country’s history (19 GW) [3][8]. This includes the Graça Aranha-Silvânia transmission line (approximately 1,500 km) costing 20 billion reais (~$3.77 billion) and the Serra da Palmeira wind project [13].

Conclusion: Brazil has enormous potential for mining, but its main constraint is not energy, but infrastructure. Mining becomes a way to monetize energy that would otherwise be lost due to overloaded grids [1].

SECTION 3. POSITION ON MINING AND CRYPTOCURRENCIES

Here lies Brazil’s main paradox — and its greatest opportunity.

3.1. Mining: 133% Growth in One Year

According to Hashrate Index’s 2026 report, Brazil’s hashrate grew by 133% year-over-year [5]. Miners are negotiating directly with generators, bypassing distributors and their markups, making mining in Brazil increasingly competitive [5]. The southern region, with its low industrial tariffs, could become a hub for companies entering the industry [5].

Key players and models:

3.2. Sugarcane-Powered Mining

Adecoagro (NYSE: AGRO) — an agribusiness giant managing over 500,000 hectares of farmland in South America. Its largest shareholder is Tether (issuer of USDT), which acquired a controlling stake for $600 million [6][11].

In June 2026, Adecoagro announced the launch of a 10 MW mining facility in Ivinhema (Mato Grosso do Sul state), with approximately 1,280 miners. The energy is produced from bagasse — the fibrous byproduct of sugarcane processing. Since sugarcane absorbs carbon dioxide during growth, the combustion of bagasse is considered nearly carbon-neutral [6][11].

Strategy: Tether previously invested in Adecoagro to gain access to physical commodities, farmland, and renewable energy infrastructure. The mining project expands this strategy into digital asset production [11].

What this means: Brazil is becoming a laboratory for a model where agriculture, renewable energy, and bitcoin mining are integrated into a single value chain.

3.3. Crypto Market: Stability Dominates

Stablecoins account for ~80% of crypto transaction volume reported to Brazil’s tax authority [9]. USDT accounts for 88.7% of total volume (~1 trillion reais from August 2019 to December 2025) [9]. USDC — 7.1%, BRZ (real stablecoin) — 3.4% [9].

Why stablecoins dominate:

3.4. Regulation: “Tropicalisation” and Strict Rules

Tropicalisation. Foreign crypto platforms serving Brazilian residents must have a local presence and comply with Brazilian standards [4]. Reverse solicitation is permissible, but the platform must prove it is not actively marketing in Brazil [4].

Stablecoins as currency operations. Brazil’s Central Bank classified stablecoin operations as foreign exchange operations (BCB Resolution No. 521) [4]. This means that VASPs working with stablecoins must obtain a BCB license to operate in the foreign exchange market [4].

Ban for eFX providers. As of October 1, 2026 (BCB Resolution No. 561), international payment service providers (eFX) are prohibited from using virtual assets for settlements with foreign counterparties. Settlements must be conducted through fiat currency operations or non-resident real accounts [4]. This is not a general ban on stablecoins, but a restriction on their use as a settlement layer for mass cross-border payments [4].

New DeCripto reporting platform. As of July 2026, Brazil’s DeCripto platform came into effect, complying with the OECD’s CARF standard [9]. Mandatory reporting on crypto-asset transactions now also applies to foreign platforms serving Brazilian clients [9].

SECTION 4. POSITION OF THE CENTRAL BANK OF BRAZIL (BCB)

The Central Bank of Brazil is one of the most pragmatic regulators in the world. It does not try to “ban” cryptocurrencies — it regulates them according to their economic function [2][4][7].

4.1. DREX: Not Digital Cash, But Infrastructure

Contrary to popular belief, DREX is not a retail CBDC. It is infrastructure for tokenized deposits and assets — a “financial fabric” for programmable settlements [2][7].

Key features of DREX [2][7]:

Why DREX, not just a CBDC?

Pilot status (2026): 16 consortiums selected, 13 nodes already operating in a simulated environment, 5,500 operations completed. However, unresolved privacy and security issues remain [2].

4.2. Stablecoins: Function-Based Regulation

Brazil’s approach to stablecoins is pragmatic and functional. Instead of banning them, the BCB classifies stablecoin operations as foreign exchange operations if they perform an economic function analogous to currency exchange [4]. This means:

4.3. The BCB Paradox

The Central Bank of Brazil simultaneously:

This is not a contradiction. It is a hybrid strategy: state infrastructure for programmable settlements (DREX) coexists with private stablecoins, which perform functions not covered by DREX [2][4].

SECTION 5. ARCHITECTURAL CONCLUSION: WHAT PATH IS AVAILABLE TO BRAZIL

Brazil is the only country that simultaneously:

Unlike China, Brazil is not building its CBDC as a weapon. DREX is infrastructure, not a tool of geopolitical pressure [2][7].

Unlike Europe, Brazil is not closing hydropower or abandoning biofuels. It uses all available resources [1][6].

Unlike Russia, Brazil does not have cheap electricity for mass mining, but it has a unique opportunity to monetize energy that would otherwise be lost due to overloaded grids [1].

Brazil’s Weaknesses

Main Conclusion

Brazil will not “import” bitcoin like Europe, nor will it “mine” bitcoin on an industrial scale like Russia or Iran. It will experiment:

Bitcoin for Brazil is not an “energy coupon” nor a “strategic reserve.” It is an instrument for utilizing excess energy and an experimental platform for hybrid models — agriculture + energy + bitcoin [1][6].

CONCLUSION: HOW BRAZIL FITS INTO THE GLOBAL TRANSITION

Brazil is not the architect of the new system nor its victim. Brazil is a laboratory where hybrid models are being tested:

Europe will become an eternal bitcoin importer — because it has no energy.

China is building parallel infrastructure — because it has a strategy.

Russia could become an energy sovereign — but it has no strategy.

Brazil experiments — searching for its own path, using unique resources: hydropower, biofuels, a vast domestic market, and pragmatic regulation.

Global meaning: Brazil shows that even a country with clean energy and developed digital infrastructure cannot find a ready-made answer. Its path is one of trial, error, and innovation. The question is not whether Brazil will use bitcoin or DREX. The question is whether it can turn its experiments into a sustainable strategy.

LIST OF SOURCES

© 2026, Editorial Board of “Kafedra” and SforNews. When citing, reference to the original source is required.

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