Agence-France Presse (AFP) reports Venezuelans hard-hit by hyperinflation are still apt to mine the world’s most popular cryptocurrency, even though they’re subject to immediate arrest for energy theft, or even extortion, by police.
Venezuelans’ Harsh Reality
Venezuela’s national currency, the bolivar, has all but crashed. A petro-money state once thought to be a regional economic leader is no longer, as the bottom dropped out of the oil market with new discoveries in the United States and elsewhere of vast natural gas deposits.
Famous for its cradle-to-grave promises, the government was forced to consider contracting social services, all in a time of political upheaval as its notoriously charismatic leader, Hugo Chavez, died, leaving a vacuum perfect for strife.
Present-day, the International Monetary Fund (IMF) projects upwards of a seven hundred percent inflation rate this year alone. The country is seemingly unable to feed itself, according to the Los Angeles Times. Politics continues to be a dead-end for Venezuela, as in-fighting and recriminations mount, cites Al Jezeera.
And heading into 2018 it does not get a whole lot better for the country, as revised IMF projections are upwards of two thousand and three hundred percent inflation rates along with a further decline in GDP of negative six percent.
Ordinary Venezuelans are taking matters into their own hands as a result.
Bitcoin a Sign of Hope
AFP’s Alex Vasquez reports while “practiced worldwide, Bitcoin mining is part of a growing, underground effort in Venezuela to escape the worst effects of a crippling economic, political crisis and runaway inflation.”
An anonymous source estimates bitcoin mining “machines [can]bring in $800 a month (more than 26 million bolivars).”
“Whoever buys bitcoins with bolivars earns money by increasing the price of the bitcoin against the dollar, and escapes inflation, a genius workaround”, a local mining consultant explains. Ironically all of this is due to government subsidizing its own demise, as “Venezuela is something of a mining hotspot because the electricity needed to run the power-hungry computers is […] almost free,” the article notes.
Speculation includes something on the order of 100,000 Venezuelans participating in bitcoin mining in one form or another. It’s catching-on and is so pervasive even the state-run security agency, Servicio Bolivariano de Inteligencia Nacional (SEBIN), is on the lookout for spikes in energy usage which may point to mining. To avoid detection, miners leave a few boxes here, a few there, in peoples’ houses, office buildings, etc. SEBIN raids on surging households is a regular occurrence.
“Lawyer Jesus Ollarves said that while bitcoin mining is legal in Venezuela, which does not have cryptocurrency laws, ‘those who practice it are often liable to arrest by the police for energy theft,’” AFP warns.
Beyond basic survival, bitcoin raised in many of these efforts go “to help buy food and medicine,” Mr. Vasquez writes, paraphrasing Dash Caracas’ Eugenia Alcala.
With literal starvation at times looming, it isn’t any wonder more and more Venezuelans are gambling on bitcoin’s ability to offer relief.
Images courtesy of: Alejandro Cegarra for USN&WR, Eyevine, Diario Bitcoin.
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Author: C. Edward Kelso