Bitcoin Forum

Venezuela’s worsening economic collapse has created something of a social experiment in the use of a digital currency as a de facto currency - a phenomenon that’s also playing out in troubled Zimbabwe.


And as inflation in Venezuela has spiraled further out of control - by one estimated, it peaked above 2,400% in September - more Venezuelans are resorting to mining bitcoin, litecoin and other digital currencies as a means of coping with the country's out-of-control hyperinflation and surviving in a country where staples like food and medicine are scarce.


However, while cryptocurrency mining isn’t explicitly illegal, the country’s Sebin intelligence service has been known to raid establishments that show a suspicious spike in electricity usage. Electricity is heavily subsidized by the state in Venezuela, making mining a particularly lucrative prospect, despite the risks.

Bitcoin mining consultant Randy Brito estimates that about 100,000 Venezuelans are "mining," although it is impossible to have an exact figure because many are protecting themselves by using servers in foreign countries, AFP reports.

According to the LocalBitcoins portal, transactions in bitcoins amounted to $1.1 million in Venezuela in the last week of September.

One local who spoke with AFP said her mining rig is producing 20 to 25 litecoins per month.

"Each litecoin is worth $46, that's $920 a month," said Veronica - a fortune in a country where the minimum monthly salary is 135,543 bolivars ($40), supplemented by a voucher of 189,000 bolivars ($56).

AFP visited one office building in Caracas that has been converted into a clandestine mining operation, with more than 20 computers hard at work performing the cryptographic calculations necessary to unlock valuable blocks of digital currency.


As international sanctions have left Venezuela starved for foreign currency, cryptocurrencies have provided one crucial means for the regular people of Venezuela - who arguably have been hardest hit by the sanctions despite marching in the streets and calling for the overthrow of the regime of President Nicolas Maduro - to avoid the consequences of the administration’s economic mismanagement. Now, the question is will Venezuelans abandon the worthless bolivar in favor of relying solely on digital currencies.

As we noted previously, one trader, John Villar, Caracas-based software developer, most eloquently stated "Bitcoin is a way of rebelling against the system." While the currency remained a niche form of payment in the country, many users purchased food and goods online through online marketplaces such as Amazon.com, albeit indirectly through gift cards purchased with the cryptocurrency.

Noel Alvarez, former president of the Venezuelan Federation of Chambers of Commerce, stated that “A maximum of one per cent of the population has access to it, but it is very useful in our situation.”

Bitcoin’s popularity in Venezuela continued to grow. It became the country’s leading parallel currency. Some vendors even begun accepting Bitcoin exclusively. A popular online travel agency, Destinia, cited that, due to the bolivar’s instability and the trouble many Venezuelans experience when attempting to leave the country, “Giving priority to Bitcoin as a payment method could be of help."

While Destina admitted that Venezuela is not a primary focal point for their company, they chose to prioritize Bitcoin payments in the Venezuelan market to facilitate the travel needs of the people in light of the persisting economic downturn.

With infrastructure in place, trading and mining becoming more popular, and the crisis escalating, Maduro’s government began to take notice.

Maduro’s War on Bitcoin
The Venezuelan government began to crack down on the Bitcoin community, with police extorting citizens for “misusing electricity” or undermining the country’s economy. These grievances intensified over time, however, and the attack on miners became more apparent. In the largest raid, two miners were caught with 11,000 mining computers and were charged with cybercrime, electricity theft, exchange fraud, and even funding terrorism.

In Feb. 2017, following the incident, Surbitcoin, Venezuela’s most popular exchange went offline. The company encouraged users to withdraw their money immediately as Banesco, the company’s banking partner, was set to revoke the account associated with the exchange. Rodrigo Souza, the founder and CEO of Surbitcoin, noted that "When it was found that there were 11,000 mining computers consuming the energy to power a whole town at a time when there are severe electricity shortages, it triggered a reaction.” Souza went on to say that the company was not contacted by the government, but Banesco revoked their account as it did not want to be associated with such an operation. Surbitcoin resumed operations two weeks following.

We suspect it will not be long before Maduro takes further, tougher action against this 'subversive' behavior.

I think that if people have enough money for mining equipment then they should afford themselves leaving this garbage country. I will not be surprised if police will start shooting bitcoin miners in Venezuela if BTC become a bigger threat to bolivar.

it is incredible because those people from venezuela are dropping their litecoins like crazy, i remember that a lot of them were just selling their litecoins at $30 each one for their local cash, or just for united states dollars because it is more stable than their local money.
But yes, it is horrible the situation that they are living right now, a lot of people is dissesperated only for one dollar, and they are able to do anything to earn that amount..

It is possible venezuela and zimbabwe are a microcosm of what many nations futures will look like eventually.

I wish the media would cover more stories like this. To show the other side of crypto's character, that crypto isn't only used by criminals & how it can bring an elevated standard of living for many.

Venezuelans cross into Colombia to buy supplies

Thousands of Venezuelans have been crossing into Colombia to buy food and medicine after the opening of five pedestrian border crossings.

Venezuela and Colombia opened several "provisional" border crossing points on Saturday for pedestrians for the first time in nearly a year as part of a progressive reopening agreed on this week.

As of 6am local time, the authorities opened a total of five crossing points in the Venezuelan towns of Tachira, Apure, Zulia and Amazonas.

During three temporary border openings last month, some 150,000 Venezuelans - suffering from their country's severe economic crisis - poured into Colombia to purchase food, medicine and other basics.

http://www.aljazeera.com/news/2016/08/venezuelans-flock-colombia-buy-supplies-160814042335562.html

Venezuela is a mess, i had the opportunity to visit their country once time ago when they didnt had this horrible government, i dont understand how does the US still didnt do anything to them, they are violating the human rights.
anyway, if this is a good opportunity for them, then it is good because they are not damaging anyone through this, but honestly, who the fuck is buying all the litecoins from them? i dont understand, because there is much more offer than demand.

This article is bullshit. No one in that country accepts transactional payments in bitcoin, the citizens of Venezuela are still using their fiat currency to pay for day to day stuff (bills, cab fare, groceries, etc), meaning that bitcoin hasn't become a de facto currency. Electricity in venezuela is cheap, which allows them to mine bitcoin and other cryptos with a big profit margin for miners due to the fact that electricity is virtually free. Those bitcoins still have to be sold in the black market for fiat.
This is not how the bitcoinization of a sovereign state should be.

http://www.zerohedge.com/news/2017-10-22/number-bitcoin-miners-venezuela-swells-100000

Article contains interesting info.

I wasn't aware btc was trading at a high of $10,000 on the https://golix.io exchange.

It is possible venezuela and zimbabwe are a microcosm of what many nations futures will look like eventually.

I wish the media would cover more stories like this. To show the other side of crypto's character, that crypto isn't only used by criminals & how it can bring an elevated standard of living for many.

Venezuela is suffering from worst hyper inflation and people are struggling to even meet their daily needs.But now,bitcoin has now come as a blessing for venezuelans since huge subsidy is given for electricity there and almost electricity is almost virtually free.

This has made venezuelan people to switch to bitcoin mining and it has gone very high that government has started to face huge electricity shortage.Police has started to arrest people mining with the charge of misuse of electricity and money laundering.

But still,people continue to mine bitcoins secretly.Bitcoin which has been more criticized by some has now started to prove that it could even turn life of people upside down suffering from economic crisis.Same model cold even be followed in zimbabwe and other states suffering from econo mic crisis.

I haven't exchange traded in years. Does anyone know if its possible to arb on the golix.io exchange if indeed btc was trading there at an all time high of $10,000? The implications of btc trading as high as $10k on some exchanges could show demand is strong enough for btc to trend over $6,000. It could mean btc will reach $10k in 2018. Will be interesting to see how good/bad of an indicator this is over the long term.

Geez, yah, people just trying to survive.

On the Nigerian exchanges you can enter bitcoin, you can not withdraw. The output requires a trusted person on the spot - which is not easy to do given their reputation. In Zimbabwe, it's probably not all that simple. Be careful.

I have recently read that Venezuela is currently the most convenient country in the world to mine bitcoins because of the extremely cheap electricity prices. I don't know if this is true, does anyone know how much is the cost of electricity in Venezuela?

Venezuela right now is also somewhere at the top charts of the most dangerous countries. I wish you the best luck with this kind of convinience. You can also take a look at North Korea where government is turning off the electricity all over the country during the night. No one in Venezuela is ensured against the same thing. You won't benefit from gree energy if you won't have a stable access to it.
P.S. They also have the cheapest petrol