Cheap electricity a boon for bitcoin mining in Venezuela

This is made possible by one of the world's lowest electricity prices as the commodity is heavily subsidized by the Venezuelan government

In a country in recession and contending with the world's highest inflation of nearly 3,000 percent in 2020, crypto mining presents an economic opportunity for a lucky few.

This is made possible by one of the world's lowest electricity prices as the commodity is heavily subsidized by the Venezuelan government.

Mining is one way of raising crypto currency, putting high-powered computers to work to solve complicated mathematical problems -- and the price of electricity is a major obstacle for miners in many countries.

But in Venezuela, the rock-bottom rate overrides most other considerations, including power cuts -- frequent in a country where public services have all but collapsed, but less spotty in the capital Caracas than elsewhere.

Nor are cryptopreneurs in Venezuela put off by Latin America's third-lowest fixed broadband internet speed.

To mine you don't need super-high-speed internet, crypto researcher and economist Aaron Olmos told AFP.

As the value of the bolivar has been decimated by years of economic crisis, bitcoin has become increasingly accepted as currency in Caracas.

Having crypto money is a way out of hyperinflation, an extra tool for confronting the crisis, said Olmos.

According to Olmos's consulting outfit Olmost Group Venezuela, transactions with crypto currency peaked at $303 million in Venezuela in 2019, before the coronavirus epidemic.

And this is nowhere near the full value of crypto money in circulation, said the analyst, as it does not factor in the currency generated by mining. There is a massive economic activity that is unseen, Olmos said.

The government of Nicolas Maduro has also tried to get in on the action, launching the Petro currency in 2018. It was banned by the United States and widely branded a scam.

The same year, Venezuela launched a crypto regulator named Sunacrip, which has since introduced a register of crypto miners in the country.