An intriguing place to watch the relationship between cryptocurrency and government is Venezuela. Without a doubt, Venezuela could use the benefits that many cryptocurrencies promise. The Venezuelan government has maintained strict controls over its fiat currency, the bolivar, since 2003, and falling oil prices since 2014 have spurred the countrys current economic depression.
The governments response has been to increase state control over the economy at the expense of the private sector. In 2017. inflation of the bolivar exceeded 650 percent As the exchange rate continued to tumble, the countrys gross domestic product (GDP) contracted 12 percent by the end of the year.
The Antminer S9 is said to be the most popular device to mine Bitcoin in Venezuela.
“A lot of people are leaving Venezuela.” said a native software developer familiar with cryptocurrency mining, who asked to remain anonymous. “At this point, the country doesnt have enough money to provide food, medicine and other necessities for its people.”
The resource that Venezuela has in the most abundance is oil. According to VenezuelaAnalysis. com. an independent website dedicated to Venezuelan news analysis, the country is the fifth – largest oil exporter in the world, with the largest reserves of unconventional oil in the world.
An abundance of oil reserves has allowed the government to subsidize electricity to the point of it being
At this point, the country doesnt have enough money to provide food, medicine and other necessities for its people.
Nearly free. The financial constriction of hyperinflation, coupled with this cheap electricity, has proved to be a strong catalyst for Venezuelans to turn to Bitcoin mining as a way to take charge of their own economic futures.
The Antminer S9 is said to be the most popular device to mine Bitcoin in Venezuela. Each unit costs about $3,000 plus shipping, and comes (often indirectly) from China. In Venezuela, three S9 miners cost $3 to run for 10 months and earn about one bitcoin in that time. This low energy cost for Bitcoin mining has made it an effective way to supplement the salaries of those in the middle and upper classes, while many Venezuelans have scaled operations so that they can easily live off the mining income alone.
Venezuelan miners, along with other Venezuelan professionals who receive payment in bitcoin. trade currency over exchanges like Coinbase or LocalBitcoins. com. To procure necessities, they buy foreign products with cryptocurrency or simply trade their bitcoin for bolivars to purchase them domestically.
Bitcoin mining in Venezuela has been dangerous for two main reasons, the anonymous source said.
“First, in a country where the national currency has no value, people are hungry and desperate to have money at the cost of committing violent crimes.” the source explained. “Second, the government is not your friend.”
Cryptocurrency mining in Venezuela was deemed legal by President Nicolas Maduro, who expressed interest in cryptocurrencies and announced that the Venezuelan government intended to create an official cryptocurrency for the country.
2017 was an especially confusing year for Venezuelan Bitcoin miners. Large operations were targeted by government authorities and traced by their irregularly high electricity consumption. In most of these cases, devices were seized and the miners were jailed for some form of money-laundering charge.
In this environment law enforcement groups are able to wield the threat of “money laundering, foreign exchange control violations, tax evasion and even homeland treason. traicion a la Patria.” said Randy Brito, the founder of a local cryptocurrency resource. BitcoinVenezuela. com.
Though Brito alleged that all of these illegal activities are certainly happening in the country, they are most often committed by members of the upper class, who are themselves often involved with the government