Venezuela cracks down on crypto mining to tackle energy crisis

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As a researcher with a background in energy policy and a personal connection to the power crisis in Venezuela, I believe that the government’s decision to ban crypto mining firms is a necessary step to address the country’s long-standing power issues. The heavy electricity demands of cryptocurrency mining have put an immense strain on Venezuela’s already fragile power grid, exacerbating the ongoing crisis and negatively impacting the daily lives of millions of residents.

Venezuela has joined the list of countries imposing a ban on crypto mining companies due to their substantial energy usage.

As a crypto investor following developments in Venezuela, I’ve come across some troubling news. Based on reports from AlbertoNews, the country’s Ministry of Electric Power intends to disconnect crypto-mining operations that rely on the national power grid, SEN (Sistema Electrico Nacional). This means that these mining companies could soon face power outages, potentially impacting their operations significantly.

The Venezuelan administration intends to curb excessive energy usage via its newest measure, all the while guaranteeing a reliable electric power source for the community.

In a May 18 statement on their platform, Venezuela’s National Cryptocurrency Association announced the latest restriction on the crypto mining sector. This decision comes after the confiscation of approximately 2,000 cryptocurrency mining devices in Maracay as part of an anti-corruption campaign.

#Oficial Prohibida la minería de Criptomonedas en toda Venezuela.

— Asonacrip (Asociación Nacional de Criptomonedas) (@AsonacripVe) May 18, 2024

The Electric Ministry highlighted the importance of ensuring reliable and effective electrical supply across Venezuela, in response to the strain placed on the country’s energy network by power-hungry cryptocurrency mining companies.

Officially, these limitations are necessary to ensure a steady power supply in the country, which has experienced significant volatility over the past ten years.

Since 2009, Venezuela has been grappling with a persistent power crisis. The situation worsened significantly in 2019 when prolonged blackouts occurred, leaving numerous towns and cities without electricity for more than a week. These recurring outages have negatively impacted the daily routines and economic functioning of residents.

Due to the significant electrical power requirements for cryptocurrency mining, some countries such as China and Kazakhstan have implemented stringent rules or even banned the practice altogether in order to safeguard their power infrastructure, leading to a concentration of mining activities in limited areas.

The Venezuelan administration’s clampdown on cryptocurrency mining is alleged to be a component of a larger campaign against corruption. This initiative has led to the apprehension of various high-level officials.

Joselit Ramírez, previously in charge of the National Superintendence of Cryptoassets, finds himself at the heart of corruption accusations.

Rafael Lacava, the governor of Carabobo state, emphasizes the significance of community involvement in rooting out illegal mining. He urges residents to come forward and report any suspected lawless mining practices.

As a neighbor observing a situation, I would advise the following: If you notice a house belonging to someone you know having an issue with their electricity, kindly ask them to address it or report it if they’re unable to. Leaving them without power could hinder their ability to earn a living and leave you in the dark as well.

As a crypto investor following the news closely, I’ve come across reports from AlbertoNews suggesting that experts believe the power crisis is due to neglected upkeep and insufficient investment in our power grid. However, the government maintains a different perspective, accusing sabotage as the cause and vowing to bring about modernization for our state-controlled power network.

Last September, Venezuelan authorities took action against crypto mining activities for the second time. In this instance, they discovered and confiscated Bitcoin mining equipment, as well as weapons, from a prison controlled by a gang. Approximately 11,000 soldiers were involved in this raid.

In March, Venezuelan authorities halted Bitcoin mining activities due to ongoing probes into a suspected embezzlement scandal involving PDVSA, the country’s state-owned oil corporation. Allegations pointed towards the misdirection of PDVSA funds into cryptocurrency wallets.

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2024-05-19 17:26