Crypto Mining Blossoms in Venezuela

The people of the South American country mired by economic sanctions and hyperinflation turn to crypto mining to earn their living

by Kyzmoff
29 May • 2 min
In Markets

The people in Venezuela, stuck in a political and economic turmoil, are increasingly relying on cryptocurrency mining activities to earn a decent living. The South American oil producer is being ruled by a dictator while battling a record inflation, reaching some 16 000% on an annual basis, and devaluing currency. So, in order to avoid losing their earnings and earn hard currency, Venezuelans are mining Bitcoins.

Mining virtual currencies in Venezuela is nearly free due to the low government-backed energy prices. With a monthly electricity bill costing less than a single cup of coffee, mining coins turns out to be very profitable. In fact, Venezuela is one of the cheapest places globally for Bitcoin mining. According to a recent Bloomberg report, “there is a crypto-mining machine in every home in Caracas”, the capital of Venezuela.

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Venezuela’s Petro virtual coin

 

At the same time, the South American country is a perfect example of how virtual currencies can be used to help people, but can also be used to manipulate investors and fraud markets. While the population is starving, food and medicines are scarce, Venezuela’s President Nicolas Maduro Moros, who recently got "reelected", has been working on the launch and lobbying for Petro, a digital currency claimed to be backed by the country’s oil, gas, gold and diamond reserves.

While it looks likely that the Petro, the first government-backed virtual coin in the world, might flop, cryptocurrencies are a huge hype among the struggling families. The decentralized formations of Bitcoin and Ethereum, in combination with the practically free energy, allow for the average citizens to earn some desperately needed cash while evading government taxes. For these citizens, the steady flow of revenue in dollars or some other foreign currency is vital, so mining is unlikely to subside any time soon in Venezuela.