Venezuela Cracks Down on Crypto Mining to Address Energy Crisis

Venezuela Cracks Down on Crypto Mining to Address Energy Crisis

Venezuela has become the latest nation to ban cryptocurrency mining firms, citing the heavy energy consumption associated with their operations. According to local news outlet AlbertoNews, the Ministry of Electric Power plans to disconnect crypto-mining companies from the national power grid, Sistema Electrico Nacional (SEN), in a bid to control excess energy use and ensure a consistent power supply for residents.

The National Association of Cryptocurrencies confirmed the ban on May 18 via a post on X (formerly Twitter). This move follows the recent seizure of 2,000 cryptocurrency mining devices in Maracay as part of a larger anti-corruption drive.

The Ministry of Electric Power highlighted the need to provide efficient and stable electrical services by addressing the significant stress that energy-intensive mining firms place on the national grid. Officials argue that these restrictions are crucial for stabilizing the country’s power supply, which has experienced severe fluctuations over the past decade.

Venezuela has faced an ongoing power crisis since 2009, with conditions worsening significantly in 2019 due to massive blackouts that left many towns and cities without power for over a week. These frequent outages have severely disrupted daily life and economic activities.

Cryptocurrency mining is known for its high electricity demands. Consequently, countries like China and Kazakhstan have imposed strict regulations or outright bans on the activity to preserve their power grids, leading to the centralization of mining operations in fewer locations.

The Venezuelan government’s crackdown on cryptocurrency mining is reportedly part of a broader anti-corruption campaign, which has already resulted in the arrest of several high-ranking officials. Joselit Ramírez, the former head of the National Superintendency of Cryptoassets, is a central figure in the ongoing corruption investigations.

Rafael Lacava, governor of Carabobo state, emphasized the importance of public cooperation in identifying illegal mining operations. He encouraged citizens to report any unlawful activities, stating: “If you, a neighbor, see a house that you know, tell that person to turn off the farm, or if not, report it, because when they take away the electricity you have to give light to a man so that he can earn a few reais (money), you are left without electricity.”

Experts, as reported by AlbertoNews, attribute the energy crisis to poor maintenance and inadequate investment in the power grid. However, the government blames sabotage and has pledged to modernize the state-controlled power network.

This recent ban is not Venezuela’s first action against crypto mining. In September, authorities seized Bitcoin mining machines from a gang-controlled prison, deploying over 11,000 soldiers in the raid. Additionally, in March, regulators suspended Bitcoin mining operations following investigations into a corruption scheme involving cryptocurrency wallets used to divert funds from the state-run oil company, Petróleos de Venezuela SA (PDVSA).

As Venezuela continues to grapple with its energy crisis, the government’s stringent measures against crypto mining highlight the complex challenges of balancing technological advancement with essential infrastructure needs.

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