It looks like the economic crisis in Venezuela has not let up and has only worsened as the years progress. An increasing amount of citizens of the economic crisis-torn country are now turning to and embracing the pioneer cryptocurrency, bitcoin, to be able to put food on the table and go about their daily lives. Hyperinflation has run rampant like a hungry demon across the land, eating away their purchasing power and so, more are switching over to bitcoin to fuel their daily needs. They are experiencing extreme increases in inflation, becoming dangerously close to 2000%. With no sign of the crisis ending in sight, they are looking for some sort of recourse. They are finding this in an uncanny ally, bitcoin.
They are able to use the virtual currency to pay for various things like hospital visits, weddings, and more. Bitcoins are serving as a store of value and provide a significant service for them in their time of need.
It has been reported that over 80,000 people of the country are in the business of mining bitcoin. This was a phenomenon that started in the country in 2014 (when the country experienced the sharp decrease in oil prices) and has not decreased since then. The number of miners seems to have increased, sharing a correlation with the continuous general decline in the economy.
The miners use specific computers to conduct the mining process, using models that have a higher processing power. Computers range in the sort of output that they can provide. They can generate around 500 to 800 dollars or more per month, or about 40 million to 77 million bolívars. This is significant in an economy where the minimum wage is $12.50 a month.
The computer pays for itself within 1 to 4 months, depending on the sort of computer purchased and what the return is on a monthly basis. The reason why it is profitable to mine in the country is due to the fact that there are major subsidies in the electricity market, which make the cost of electricity a cost that one does not need to account for. This incentivizes these miners to scale up their operations (once they are established) to mine more.
Miners are not openly mining due to there being retaliation from local law enforcement for engaging in the activity, despite the fact that there has not been any movement made by the government to make it illegal in any form or fashion. One would wonder what law these police officers are enforcing.
It seems that if the intelligence service of the nation finds out that you are a miner, you can be accused of criminal activities such as money laundering or theft of electricity. Those charges can lead to your arrest and confiscation of your equipment, allowing them to profit off of the miners through extortion.
Both Rich and Poor Alike
Both the rich and poor are increasingly converting their bolivars into bitcoins and then utilizing the currency as it was intended, as a means of payment to conduct transactions. Bitcoin is primarily serving as means to earn excess gains on your capital in countries like the USA, South Korea, and other economically stable nations. But in Venezuela, it serves as way to keep the fabric of society together.