The phenomenon of Bitcoin mining in Venezuela

The exchange control in Venezuela that authorizes the amount of foreign currency a person can acquire is extremely limited. As a result, black market prices are skyrocketing and the country's economic crisis is worsening every day. The forecasts for the year forecast inflation that could climb to 1400%, according to calculations by the firm Ecoanalítica.

The phenomenon of bitcoin mining in Venezuela arises from a need to safeguard and escape inflation. The founder of BitcoinVenezuela.com, Randy Brito, estimates that some 100,000 Venezuelans are "undermining" and that the growth in these transactions in the country began in 2014, from the economic crisis due to the fall in oil prices.

The "mining" of bitcoin consists of mathematical operations that verify the validity of transactions in Bitcoins through computers. This service provided by the machines is rewarded with Bitcoins that can be exchanged for dollars, other cryptocurrencies, or bolivars.

The computers that "dig" the Bitcoin mines are specially built for that purpose and there are different models with varied computational capabilities. Diego, a young Venezuelan miner who prefers to use an anonymous name, told Euronews: "There are machines that give 800 dollars a month", equivalent to more than 77 million bolivars on the black market, compared to a minimum wage of 456,507 bolivars. .

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"A computer costs between 1000 and 4000 dollars plus customs taxes. However, electricity is subsidized in Venezuela, which makes "bitcoin mining" very profitable since it is a very energy-consuming activity.

Operating cryptocurrencies in Venezuela is not illegal, there is no regulation. However, the mining club operates from underground in offices, basements, houses and warehouses throughout Venezuela.

Mistrust and secret operations are due to the fear of visits by the Bolivarian National Intelligence Service (SEBIN) or the Scientific and Criminal Investigations Body (CICPC). "If you get the SEBIN, they accuse you of money laundering, legitimization of capital and electricity theft, they threaten to take you prisoner and confiscate the machines" Diego tells us.

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"I know people who have had to pay more than 40 thousand dollars equivalent in Bitcoin to the CICPC. They extort you under the pretext of illicit exchange and contraband. The SEBIN and the CICP are also in the mining business, after seizing them they use them and sell them. "Alejandro, a young Venezuelan miner, also decides to use an anonymous name.

"They know where the mining machines are in various ways: sometimes they are very exposed and they see them from the street. Those who hide better catch them with the meters of CORPOELEC (National Electric Corporation) through the high electrical indices. The SEBIN also has access to the IP, so they know who is entering bitmain.com, the most recognized company selling mining equipment "says Diego.

Whoever gets Bitcoins today with bolivars gains value due to the increase in the price of bitcoin with respect to the dollar. The bitcoin-dollar ratio is increasingly valuable, and the bolivar increasingly poor. With few bitcoins you have many dollars, and with few dollars you have many bolivars.

"With the profits of the mining of a day, I live very well all week," says Diego.

Bitcoin allows you to buy services and products around the world, payments are almost instantaneous and with very low commissions. In addition, Bitcoins can not be regulated by any government, and it is very easy to exchange them for currency. Bitcoin is a circumstantial resource of the Venezuelan situation.