Number Of Bitcoin Miners In Venezuela Swells To 100,000

[Hydrogen]

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.

According to TheNational.ae, bitcoin adoption in Zimbabwe is seemingly skyrocketing as the country’s economic situation looks bleak. So much so, that one bitcoin is trading at nearly $10,000 on the Golix.io exchange, while the global average is, at press time, of $5,642.00.
 
According to a local trader, bitcoin isn’t just being bought by individuals, but by businesses with bills to pay. The country adopted the U.S. dollar back in 2009 as its fiat currency, as the Zimbabwean dollar had lost nearly all its value.
 
At press time, LocalBitcoins Zimbabwe has people buying bitcoin at the global average, and some buying the cryptocurrency for cash for well over $10,000 in the country’s capital. Bitcoin, as every bitcoiner would expect, is helping people in the country survive times of economic uncertainty, as Zimbabwe has been embroiled in a crisis for years.

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.

"Venezuela was one of the richest per-capita nations in the world... but now, hyperinflation is a very difficult thing to understand until you have to buy lunch..."
 
"The country has not yet dollarized...  but there's not enough dollars in Venezuela for that to have happened..."
 
"Venezuela is becoming a cashless society... we are starting to see in Venezuela, the first bitcoinization of a sovereign state."

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.

Caracas (AFP) - Inside a locked room in an office building in Caracas, 20 humming computers use their data-crunching power to mine bitcoins, an increasingly popular tool in the fight against Venezuela's hyperinflation.
 
In warehouses, offices and homes, miners are using modified computers to perform complex computations, essentially book-keeping for digital transactions worldwide, for which they earn a commission in bitcoins.
 
While practiced worldwide, Bitcoin mining is part of a growing, underground effort in Venezuela to escape the worst effects of a crippling economic and political crisis and runaway inflation that the IMF says could reach 720 percent this year.
 
Having no confidence in the bolivar and struggling to find dollars, many Venezuelans, who are neither computer geeks nor financial wizards, are relying on the bitcoin - currently valued around $6,050, or other virtual currencies.

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.

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.

[1713942351]

1713942351

[GreatOrchid]

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..

[Murloc]

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.

[shursight]

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.

[aeternus]

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.

They are just capitalists, if I'm right electricity is subsidized by the government so they have access to very cheap electricity and they are using that to mine bitcoin and other cryptos, they are using that old adage if life gives you lemons then you make lemonade, it is that simple.

[tomahawk9]

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.

[megynacuna]

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..

I guess it all speaks well for bitcoin and us the early investors because they are going tom increase the awareness of bitcoin and have majority of us rich due to the demand in their country and south america at large that they are going to be creating.

[jseverson]

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

In what context? Their economy collapsing on them? Or their use of Bitcoins? Bitcoin is certainly a great safe haven in cases like this, but there's really no need to go all-in unless your country's state is already as bad as Venezuela and Zimbabwe. Fiat is still less risky at the moment, with little volatility.

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.

It's great that these people have something to lean to with their governments failing them. I wouldn't say this story paints Bitcoin in a very positive light though. It's certainly a shining beacon of hope, with farmers being able to earn as opposed to starving, but people have been arrested for abusing the party subsidized electricity. This turns out even worse as it was revealed that they're suffering from a power shortage, so these people with massive mining farms are technically hogging resources that was meant for their entire population.

[Hydrogen]

According to TheNational.ae, bitcoin adoption in Zimbabwe is seemingly skyrocketing as the country’s economic situation looks bleak. So much so, that one bitcoin is trading at nearly $10,000 on the Golix.io exchange, while the global average is, at press time, of $5,642.00.

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.

Also in regard to some saying bitcoin miners in venezuela couldn't buy anything in venezuela with crypto, I don't know the answer to that. I they cross the border into neighboring columbia and spend their crypto there.

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

Of course, there are other methods they might use.

[aeternus]

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.

Intervening in other countries affairs is never a good idea the story is filled with examples of that, the people of Venezuela area going to need to find a solution to the problems they created themselves it is harsh but they need to resolve this on their own without external influence.

[ItsEzMkay]

Really? Wow courageous people you have living in Venezuela..because I heard this one story of two miners who were caught with a complex operation that this was going against the state. They were later jailed and fined

for their actions. Although I will say I think they were stealing electricity too but still crazy stuffs happening in Venezuela right now!

[cellard]

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.

If Venezuelans can make a good profit mining due cheap electricity, they are only lacking accepting bitcoins in return of goods and services. If they choose not to, maybe it's their fault for being idiots. They could circumvent the entire fiat mess by doing so, but they still choose to carry bags of papers to do groceries.

I guess they can't afford a cheap phone or tablet to install electrum? or they just refuse to accept bitcoin payments? because on than that case then that's their fault.

[usorin]

It is easy to have principals with your belly full. When it comes to hunger everything it's changes, we are talking about surviving. I'm glad that crypto coins helps i this situation. I hope for better times for all the hungry souls out there...this is not as it should be...

[hahahafr]

yes, venezuela is a mess in all aspects, i dont know why the president is still alive, he killed hundreds of entire families, his government is a mess, since the crisis of the petroleum happened venezuela could not recover, and they couldn't stop printing their local money, and that is why they had more than 1000% of inflation in just a year. But a lot of people started mining bitcoins or altcoins only to survive, but they putted in jail a lot of miners because they think that bitcoin is ilegal..

[centralbanksequalsbombs]

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.

According to TheNational.ae, bitcoin adoption in Zimbabwe is seemingly skyrocketing as the country’s economic situation looks bleak. So much so, that one bitcoin is trading at nearly $10,000 on the Golix.io exchange, while the global average is, at press time, of $5,642.00.
 
According to a local trader, bitcoin isn’t just being bought by individuals, but by businesses with bills to pay. The country adopted the U.S. dollar back in 2009 as its fiat currency, as the Zimbabwean dollar had lost nearly all its value.
 
At press time, LocalBitcoins Zimbabwe has people buying bitcoin at the global average, and some buying the cryptocurrency for cash for well over $10,000 in the country’s capital. Bitcoin, as every bitcoiner would expect, is helping people in the country survive times of economic uncertainty, as Zimbabwe has been embroiled in a crisis for years.

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.

"Venezuela was one of the richest per-capita nations in the world... but now, hyperinflation is a very difficult thing to understand until you have to buy lunch..."
 
"The country has not yet dollarized...  but there's not enough dollars in Venezuela for that to have happened..."
 
"Venezuela is becoming a cashless society... we are starting to see in Venezuela, the first bitcoinization of a sovereign state."

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.

Caracas (AFP) - Inside a locked room in an office building in Caracas, 20 humming computers use their data-crunching power to mine bitcoins, an increasingly popular tool in the fight against Venezuela's hyperinflation.
 
In warehouses, offices and homes, miners are using modified computers to perform complex computations, essentially book-keeping for digital transactions worldwide, for which they earn a commission in bitcoins.
 
While practiced worldwide, Bitcoin mining is part of a growing, underground effort in Venezuela to escape the worst effects of a crippling economic and political crisis and runaway inflation that the IMF says could reach 720 percent this year.
 
Having no confidence in the bolivar and struggling to find dollars, many Venezuelans, who are neither computer geeks nor financial wizards, are relying on the bitcoin - currently valued around $6,050, or other virtual currencies.

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.

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.

Thank you for this post.

[farhaan]

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.

[centralbanksequalsbombs]

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.

Geez, yah, people just trying to survive.

[AlistairJ]

According to TheNational.ae, bitcoin adoption in Zimbabwe is seemingly skyrocketing as the country’s economic situation looks bleak. So much so, that one bitcoin is trading at nearly $10,000 on the Golix.io exchange, while the global average is, at press time, of $5,642.00.

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.

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.

[sirenmoon]

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.

Geez, yah, people just trying to survive.

Venezuelan people are looking for any means necessary to survive in the broken economy country. Government is currently doing legal - not legal things. Arresting people for mining Bitcoin is questionable. Other countries should intervene in this problem and help the citizens in some way. Venezuela is currently ongoing through the total collapse of the financial system. To me, this news is astonishing and unbelievable. It points to the fact that Venezuela is the very much unestablished country with the mass disagreement with the politics that is currently on the authority. I am maximally supporting the miners and if they can in any way mine without being noticed they should do it and with the first opportunity leave the country in the search for the better establishment where they shouldn't fear for the safety of them and their children.

[setupbounds]

According to TheNational.ae, bitcoin adoption in Zimbabwe is seemingly skyrocketing as the country’s economic situation looks bleak. So much so, that one bitcoin is trading at nearly $10,000 on the Golix.io exchange, while the global average is, at press time, of $5,642.00.

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.

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 don’t know much about these countries that how they are treating bitcoins but what I have read here, I have analyzed bitcoins are being prevailed over different countries. In different corners of world bitcoins are becoming famous and reaching out the laymen who would be having fantastic chances to hit the mark. We are hopeful to see bitcoins creating ease for their users.