Bitcoin becomes Venezuela's savior, people are determined to mine Bitcoin even if they have to go to jail

As the economy struggles, more and more Venezuelans are seeking hope in Bitcoin mining , even if they risk getting arrested by police for stealing electricity. Bitcoin is a way out for Venezuelans Randy Brito was 14 years old when he and his family fled Venezuela in 2005. Despite the country's booming economy at the time, many middle-class families like Brito chose to leave the country due to widespread nationalization of private enterprises. Brito and his family moved to Spain. He later became a web developer. In 2011, he discovered Bitcoin and immediately realized the profit potential in Bitcoin mining .

When we talk about mining Bitcoin, we are referring to the process in which computing power is used to solve a mathematical puzzle and create a Bitcoin block. The winner of this mathematical puzzle can get a reward of 12.5 Bitcoins for each block they create. When Brito started mining Bitcoin in 2011, the reward for each block was 50 Bitcoins. Brito made some profits from mining, but he was more interested in the technology behind Bitcoin and sharing it with others than the money he made. So he started the website bitcoinvenezuela.com, which now has more than 7,000 pages. The website serves as a hub for Venezuelan Bitcoin miners, where they can share their stories and experiences. Venezuela's Troubled Economy Years ago, Venezuela was the most developed country in South America. Today, the country has a runaway market and severe inflation, with an annual inflation rate of up to 1,600%. People have to spend long hours lining up in front of government-run grocery stores every day to buy some basic goods. Even hospitals have to continue working without sufficient equipment. People have been hit by the economy in all aspects. So it’s no surprise that everyone is protesting en masse.

Venezuela is a socialist economy where the government has a firm grip on the economy and monetary policy. If someone wants to buy foreign currency in Venezuela, they must do so at a government-approved rate, which is very expensive. It is in this context that Bitcoin has come into the limelight. Since Bitcoin is internationally accepted, many Venezuelans are using it to buy foreign or local goods, and many companies are offering services that can only be paid for in Bitcoin. People can earn Bitcoin through Bitcoin mining, and then use it to buy goods in an economy where the local currency is rapidly losing purchasing power. This is the main reason why Bitcoin is so popular in Venezuela today. As shown in the chart, you can see that Bitcoin has seen a lot of growth in Venezuela, especially since the second half of 2016.

(Local Bitcoin transaction volume for one week, in Venezuelan glass wal, data from coin.dance)

Mining in Venezuela and the Risks of Mining According to Brito, Bitcoin mining became popular as Venezuela's economy deteriorated further. The value of the borsa (Venezuela's national currency) fell, and Bitcoin became more attractive. Alberto (a pseudonym at his request) is a Bitcoin miner who has been mining Bitcoin for more than two years. Mining Bitcoin has become his main source of income, earning more than $1,000 per month, and since Venezuela's electricity is very cheap, he has almost no costs. However, miners like Alberto take a big risk when they use electricity to mine Bitcoin. Because the production and sale of electricity in Venezuela is nationalized, this means that the state has full visibility into who is using the electricity and for what purpose.

Venezuelan police recently arrested four miners on charges of stealing electricity and tax fraud, and confiscated their equipment. "Not only the secret police, but also the national police conducted surprise inspections on miners," Brito said. However, Venezuela's low electricity prices have attracted more and more people to start mining Bitcoin. In the United States, it costs 22 cents per kilowatt-hour, while in Venezuela, it only costs 0.05 cents per kilowatt-hour. Compared with the United States, Venezuela's electricity price is more than 400 times cheaper. Since mining Bitcoin is a process of converting electricity into digital assets (Bitcoin), such cheap electricity means that you can earn Bitcoin almost for free, which is one of the main reasons why Bitcoin mining is popular in Venezuela, and one of the reasons why Venezuelans are willing to take the huge risk of going to jail to mine Bitcoin.