The very low electricity prices in Venezuela have created a strong incentive to mine Bitcoin for a lucky few who have the capital (and dare) to buy miners and infrastructure in the country. The rise of digital currencies has created a new industry that uses cheap energy and turns it into valuable bitcoins. In other local news, Axie Infinity, a game to make money, has created opportunities for the less fortunate. The country is going digital because of the opportunities these new tools offer.
Cheap electricity creates mining opportunities in Venezuela
The cheap electricity costs create opportunities to use this resource and convert it into Bitcoin, a scarcer and more valuable resource. Many investors in the country have done that. Theodoro Toukoumidis, CEO of Doctorminer, a service-oriented Bitcoin mining company, has more than 80 ASICS working non-stop. According to him, all of these machines combined cost less than $ 10 a month in electricity.
However, each of the mining machines costs around $ 400, a high price to pay for a country whose minimum wage does not reach the $ 10 mark. In any case, the price of mining goes up even higher as miners have to adjust the electricity infrastructure and make repairs in order to be able to connect to the aging electricity grid. Venezuela is a country that has gone through a phase of electricity rationing that saw citizens suffer catastrophic blackouts in 2019.
The situation has improved since then, but there are still analysts concerned about the impact a power shortage could have on miners’ operations. Just last month, authorities in a major Venezuelan state cut power to all miners because of their supposedly massive electricity consumption. These miners have since been reconnected to the power grid with a delay.
The hidden costs of mining
Mining has been a regulated and legal activity in Venezuela since Sunacrip, the Venezuelan cryptocurrency watchdog, established it as such last year. In order to start a mining operation, investors must meet a number of requirements. These steps can be a little tricky to follow, but they ensure that in theory the government does not act against it. But experience says otherwise. There have been many stories of authorities visiting miners to blackmail them for their activities.
In fact, Sunacrip had to clarify that miners without a representative from the institution could not be visited by state security forces in order to curb the frequency of these questionable visits. Because of this, some miners have chosen to hide their activities from the eyes of the regulator. This has resulted in the confiscation of thousands of mining machines by the authorities.
The digital economy flourishes
All of these factors together create a climate that appears conducive to the development of a digital economy and allows some Venezuelans to escape the dire situation in the country. While most Venezuelans cannot buy and organize a mining operation, there are other ways to make money from crypto that come with lower entry costs. Axie Infinity, a play-to-earn game launched in 2018, has allowed some Venezuelans to invest and offer scholarships for others to earn while playing the game.
Axie Infinity has become so popular that a number of academies that offer scholarships for the game have gained prominence on social networks. Vzlatothemoon, one of those academies, has achieved trending status several times on Twitter. A scholarship in Axie means that an investor lends another player the characters they need to play and they share the proceeds. This has become so popular in Venezuela that there are currently more than 300 stores accepting SLP, one of the game’s native tokens, as a payment option.
What do you think of the digital economy brewing in Venezuela? Let us know in the comments section below.
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