March 12, 18:56 EST
Venezuela has become widely known as an economic basket case in recent years. But with its cheap electricity and volatile national currency, the country has at least one competitive advantage: It’s a good place to make the digital cash known as bitcoin.
The Bitcoin community in Venezuela faces an unusual situation. They are uncertain about their operations as the law enforcement agencies in the country are trying to put a stop to it. Meanwhile, if the cops do come knocking, they are left with two options — to shut shop or pay up and hope they take a lenient view and let them operate.
People have found a use for Bitcoin under a variety of circumstances, some of them when faced with a dire need. Venezuelans probably fall into the category of desperate people trying to overcome the country’s failing ecosystem by opting for an alternative currency.
Bitcoins are increasingly accepted online for buying real-world goods and services. And, unlike the Venezuelan bolivar, the virtual currency has been going up in value.
Making bitcoins is known as “mining,” but it requires a powerful computer instead of a pick and shovel. Those computers produce bitcoins by creating elaborate algorithms, but they also suck up a lot of electricity. In many countries, the cost of running a “mining terminal” can run higher than the value of the actual bitcoins.
In early February it was announced that Venezuelan police arrested eight bitcoin miners in the time span of two weeks. The country's leading bitcoin exchange announced February 2, that it's suspending operations because its bank account was revoked. The recent spate of incidents is causing members of the country's bitcoin community to take new measures to conceal their activities.
In a separate incident, the Venezuelan National Police Force (PNB) raided a warehouse in the city of Valencia late January with 11,000 bitcoin mining computers. They arrested Eusebio Gómez Henríquez, 51, and Andrés Alejandro Carrero Martínez, 35, who were accused of cybercrime, financing terrorism, stealing electricity, and exchange fraud.
In yet another incident, agents from the Cuerpo de Investigaciones Científicas Penales y Criminalisticas (CICPC) arrested four bitcoin miners in the town of Charallave on January 25.
Prior to January 25, Venezuela's only known bitcoin-related arrests occurred in March of 2016, when three men were detained in separate incidents by the Servicio Bolivariano de Inteligencia Nacional (SEBIN). (They've all since been released.) With the recent incidents, there are now three separate law enforcement agencies that have arrested bitcoin miners in Venezuela.
Bitcoin mining is Venezuela is turning socialism against itself.
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