HomeNewsHidden Survival: Bitcoin Mining Thrives Underground in Venezuela

Hidden Survival: Bitcoin Mining Thrives Underground in Venezuela

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  • Small-scale, clandestine miners are keeping the Bitcoin mining market alive in Venezuela despite government crackdowns.
  • Offers of used Bitcoin ASIC miners are available, with mid-range devices sold in bundles for around $11,000.

Venezuela’s Bitcoin mining industry faces stringent government regulations, including a recent order to disconnect miners from the national power grid. Despite these challenges, the industry survives thanks to small-scale, clandestine operations.

Clandestine Miners Keep the Market Alive

Over a month ago, the Venezuelan government ordered the shutdown of Bitcoin miners from the national power grid, pushing the sector to the brink of collapse. This drastic measure led companies specializing in digital mining services, such as equipment sales and technical support, to adopt extreme strategies to mitigate business paralysis, including auctions.

Despite these obstacles, the Venezuelan market still sees the sale of Bitcoin ASIC miners. On social media platforms like Instagram, advertisements for these devices, including bundles of ten used S19J Pro models from Bitmain for $11,000, are common. One such vendor, Crypto Tools CA, offers equipment and services for digital mining, recognized since its establishment in 2020.

The significance of Crypto Tools’ offer is underscored by the combined power of ten Bitmain S19J Pro ASICs, which can contribute over 1,100 terahashes per second (TH/s) to the Bitcoin network. This boosts the network’s processing power and the chances of earning mining rewards.

CriptoNoticias reports that these miners are imported used devices, with prices reflecting production costs in China, where most of Crypto Tools’ inventory originates. However, the regulatory environment in Venezuela remains uncertain. Digital mining is banned from the national power grid due to a government decree blaming mining operations for recurring power outages affecting the population.

The government’s crackdown in May resulted in the seizure of over 11,000 Bitcoin miners and the shutdown of several mining farms. This has had a chilling effect on businesses offering Bitcoin mining services. While some companies have paused their operations pending regulatory clarity, others, like Crypto Tools, continue to operate.

Venezuela’s digital mining sector is further complicated by the absence of a regulatory body for over a year. The National Superintendent of Crypto Assets (Sunacrip) was implicated in a government corruption scandal, resulting in the loss of $20 billion. This led to Sunacrip’s intervention in March 2023, causing a forced halt in the mining industry.

Amidst these challenges, small-scale miners continue to operate clandestinely. For instance, one miner in Caracas runs 60 Bitcoin mining machines around the clock, unnoticed by the government. These small operators maintain that their activities are essential for the survival of Venezuela’s digital mining sector, contributing to the income of many families and operators who have adapted to covert operations.

Despite the risks, small miners mitigate their exposure by setting up operations in discreet locations. They believe that clandestine mining is currently the safest option in Venezuela, given the government’s stance. Some miners suggest that, in the event of government raids, bribes can often resolve the situation.

However, these small operations face an uncertain future. Without the ability to renew their equipment, crucial for continued operation, they may not survive beyond a year under current market conditions.

Jesús Montilla, CEO of Crypto Tools, emphasizes the role of small miners in sustaining the market. He argues that their energy consumption does not exceed the limits set by Corpoelec, the national electricity provider. Thus, these miners, while operating on a small scale, are vital to the ecosystem, supporting the industry’s commercial activity and indirectly creating jobs.

In contrast, some industry stakeholders believe that small miners only add to energy consumption without significant economic contribution. They argue that larger farms, now mostly shut down, were the primary drivers of liquidity and trade volume in the country’s cryptocurrency ecosystem.

Despite differing views, the resilience of small-scale, clandestine Bitcoin miners continues to sustain the digital mining industry in Venezuela amidst regulatory and economic challenges.

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Nikita Dmitrievich
Nikita Dmitrievichhttps://www.ethnews.com/
Nikita, a young and ambitious crypto investor who has been actively involved in the cryptocurrency world for the past 6 years. With a keen interest in blockchain technology, Nikita has been investing in various cryptocurrencies and has seen significant returns on his investments. He is passionate about educating others on the potential of cryptocurrencies and frequently shares his insights on social media platforms. Nikita believes that cryptocurrencies are the future of finance and is constantly researching new projects to invest in. With his dedication and knowledge, Nikita is quickly becoming a prominent figure in the crypto community. Business Email: [email protected] Phone: +49 160 92211628