Reportedly the cheapest country in the world to mine Bitcoin, Venezuelan authorities have cracked down on local mining operations by banning any new imports of mining hardware, including certain types of graphics cards and computers as well as ASIC miners.
While the government has embraced cryptocurrency with the launch Petro, the state crypto tied to the value of oil, their stance on local miners is not as welcoming.
The current Venezuelan economic crisis is the worst the country has ever seen, leading to the hyperinflation of the currency, crippling debt, food shortages, and widespread civil unrest.
As the government printing off huge amounts of money, the minimum wage lost purchasing power – the government continued to print money while raising the wages as well, spiraling the economy out of control after an initial collapse over falling oil prices.
The bolivar, Venezuela’s national fiat currency, has lost 99.99% of its value over the last five years while inflation has gone up at an annual rate of 16,147 percent.
Used as confetti in baseball games and crashing weighing scales at delis, the money is essentially worthless – the government has announced plan to cut three zeros from the end of the currency starting on June 4.
Many Venezuelans turned to cryptocurrency as the collapse began to get worse, using it as a store of value in their efforts to try and preserve their dwindling savings.
Thousands began to mine Bitcoin and other cryptocurrencies as well – due to the exploding cost of living, the government placed a freeze on the cost of utility bills, and at the moment the cost of paying the electricity, phone, water, and heating bills is about the same as the price of a cup of coffee in a cafe.
At costs of around $530 per BTC, Venezuela is the cheapest country in the world to mine Bitcoin and Caracas, in particular, has become a mining hub as the citizens struggle to survive.
But no longer. Local media reported yesterday that a new government policy set out in April has been in effect, banning mining equipment to prevent people from abandoning the state currency entirely. Customs authorities have been seizing computer equipment by air and sea in the nationwide crackdown.
Shipping companies Liberty Express and DHL have adapted to the new measures, either updating their pages to inform users of the new restrictions or sending out notices to customers directly.
The National Association of Cryptocurrencies will meet with the Superintendence of Cryptoactives and Related Venezuelan Activities to discuss the issue and perhaps outline a time limit to the ban.
Superintendent Carlos Vargas said in April:
“We are in an evaluation process to select and authorize companies that are qualified to import and market digital mining equipment and be responsible for the respective guarantees in our country.”
Vargas warned people to be careful what they purchased for mining operations as no equipment has as of yet been certified or approved by regulators.