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Venezuela Bans Bitcoin Mining

Venezuela’s government has announced it will ban bitcoin mining and seized 11,000 application-specific integrated circuits used to mine the cryptocurrency.

The statement also said the government had disconnected a number of Bitcoin mines as it sought to “disconnect all cryptocurrency mining farms in the country from the electrical system, avoiding the high impact on demand,” Bitcoin.com reported.

Cointelegraph reports that the announcement also followed the confiscation of 2,000 Bitcoin mining devices in the city of Maracay.

Bitcoin is a drain on the grid due to the amount of electricity it requires. This has made some oil-rich countries such as Kazakhstan global Bitcoin mining hubs. However, governments have started to crack down on the practice, with the crackdown especially notable in China, where bitcoin mining and trading was banned back in 2021.

Venezuela, despite its oil wealth, has trouble with reliable electricity supply amid years of U.S. sanctions and mismanagement. Blackouts in Venezuela are a frequent occurrence, which has made Bitcoin even more problematic for it than for other countries where the practice is popular.

Yet at the same time, the country’s government is very much in favor of cryptocurrencies: state-owned PDVSA uses them for its international oil trade to avoid sanction action by Washington. Last year, the use of cryptocurrencies was at the center of a corruption investigation at PDVSA involving some $21 billion in unaccounted receivables, Reuters noted in a recent report on plans by the Venezuelan government to step up its use of digital currencies.

According to some of the reports on the bitcoin crackdown by Caracas, it is part of the ongoing anti-corruption push that saw the previous head of

Back in 2018, Venezuela introduced its own official cryptocurrency, the petro, which was to be gold-backed and used in international dealings. Since then, however, the petro has faded from news headlines and likely use, replaced by a digital currency dubbed the USDT. Also known as Tether, the cryptocurrency is pegged to the U.S. dollar.


By Charles Kennedy for Oilprice.com

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