Originally finding comfort in the digital gold rush, Venezuelans today live in a harsh reality. Dealing with hyperinflation and economic uncertainty, the nation has outlawed all crypto mining operations linked to the national grid.
Announced by the Venezuelan National Power Ministry, this choice gives the collapsing power grid top priority over the once-booming bitcoin sector.
From Hope To Headaches: The Rise And Fall Of Crypto Mining In Venezuela
Many Venezuelans found great promise in bitcoin mining. Given the national currency, the Bolivar in a state of freefall found digital assets to provide a means of income generation and inflation hedging tool.
The very cheap electricity in Venezuela added to the appeal of cryptocurrency mining. Homes and companies hummed with the whirl of specialized computers, constantly spewing digital currency.
But this digital El Dorado paid a great cost. The already precarious electricity system of the country was severely taxed by the explosion in mining activities.
Hence the outcome is More frequent and protracted blackouts throw whole towns into darkness and cause everyday disturbance. The government could no more overlook the energy situation as public irritation and pressure grew.
A Fork In The Road: Balancing Power Needs With Livelihoods
The face of the government’s campaign turned out to be Governor Rafael Lacava of Carabambo state. Leading a sequence of forceful actions, Lacava resulted in the seizure of about 11,000 ASICs, specialised gear used for mining, and the closing of many mining operations. He even enlisted the public, pushing people to document any alleged illicit mining operations.
Lacava underlined how urgently the power grid needed to be stabilised. “These steps are absolutely vital,” he said. According to him, the recurrent blackouts have severely damaged the economy and brought great suffering for Venezuelan people. “We depend on consistent electricity for our homes, hospitals, and companies,” he said.
The Future Of Crypto In Venezuela: Uncertain And Unpowered
Still, the restriction offers a fresh set of problems. Many Venezuelan people—especially those living in economically poor areas—had grown to depend on crypto mining for their living.
The abrupt loss of this money source makes their already unstable life much more difficult. The administration has not yet declared any particular support initiatives for anybody affected by the prohibition.
The course of bitcoin mining in Venezuela is yet unknown. The officials have not made clear if the restriction is permanent.
Although the relocation guarantees a more steady electricity grid in the near future, it begs questions regarding the long-term survival of the young crypto sector in the nation.
Featured image from Getty Images, chart from TradingView