Venezuela arrests 4 bitcoin miners as trading highs continue
bitcoinist.com
bitcoinist.com
TL;DR "Bitcoin mining is arguably the best possible use of electricity in Venezuela because it's providing the country with what it needs most—a relatively stable currency that retains its value across borders."
http://reason.com/archives/2016/11/28/the-secret-dangerous-w...
> ... making life tolerable—if not always easy—in the midst of a socialist hell.
I have no idea how it is in Venezuela, but as a citizen of former socialist / now capitalist republic I take such articles with a grain of salt.
One could also argue that they are basically stealing the (heavily subsidized) energy from other citizens of Venezuela. In capitalism such thing would be normal, but in socialism it is far from it.
They are not 'stealing' the energy 'from other citizens' they are using the energy that the bad repressive government of Venezuela provides. Its the governments prorogative to subsidize energy, and they have to deal with the consequences.
I however agree that 'in the midst of a socialist hell' is not an apportierte way to write an article.
Is that bad?
The only reasonable thing about free markets is that they bring home the bacon from the exploitation of the proles. How wonderfully "free", to be forced to sell your labour and be treated as any other commodity.
Wow.
Edit: It looks like the price is so low scripts are breaking all over the place: "The price of diesel in Venezuela is 0 EUR per liter which is 100% lower than the average world price." http://www.mytravelcost.com/Venezuela/gas-prices/ http://www.mytravelcost.com/Venezuela/gas-prices/
With the instability of their currency I can understand why someone would want to use or buy bitcoin, but why mine there?
Now, this is obviously horrible for the environment. But what can you expect when your own currency is being rapidly destroyed by the power-hungry idiots that have taken hold of the country. Let's hope for a brighter future.
The infrastructure is collapsing, finding food to eat is a game of going to every supermarket in the city, among other things. I think my Dad puts it really well when he says that Venezuela has had a reversal of all the progress we made for decades; people have lost a lot of their values simply because life is so tough.
Is there any evidence government cronies are mining Bitcoin en masse?
I'm not quite sure why people who have contacts in the government would need/want to run bitcoin.
If you do have reliable contacts, the best way to make money (as I understand it) is from import/export fraud, as well as exchange rate trickery.
Bitcoin seems like it's something you can do without government contacts.
USD, Bitcoin, commodities, food ... anything has better return than that.
You'd be squeezing your contacts for hard currency, which is simultaneously more lucrative and easier than mining bitcoin. Bitcoin is for people who are locked out of official exchange rates.
So basically they are buying electricity at official rate and then selling the proceeds in the black market. Rinse and repeat. I suspect, also, their biggest challenge is to get the miners inside the country (since they are usually huge in size)
Yes, it is. Mining cost is overwhelmingly dictated by energy cost. And once you have a small farm running, it should be easy to scale up.
Also consider the possibility that they were stealing the power (I think I read that somewhere).
You're right about the electricity point - replacement schedules are often dictated by power per watt, since improving that expands margins. If power is free or subsidized, hardware costs are a larger part of expenses and it becomes tempting to buy more older gear instead of less fancy stuff.
(As an aside, miners are a great place to buy computer parts for that reason - I've known several unloading last year's GPUs dirt cheap. The hardware is run into the ground, but I've seen "if it craps out call me and I'll replace it" deals.)
I suspect you answered your own question.
>the electricity subsidized enough to justify all the other headaches associates with running an operation out of there
People tend to behave rationally so based on the other prospects, which there aren't many of in Venezuela, Bitcoin mining must have become a useful source of income.
> 3.1[US cents/kWh] at Official exchange rate ( 13.50 Bs/US$) or 0.48 [US cents/kWh] at unofficial exchange rate (1.095 Bs/US$)
(This may have changed due to high inflation.)
For comparison, in the same table the price in continental USA is between 8 and 17 [US cents/kWh].
They were exchanging it for money or stuff in Colombia, so they were getting an effective price similar to using the black market bolivar/US$ exchange rate, i.e. 0.48 [US cents/kWh]
I don't understand. Does Venezuela have some law that says people aren't allowed to use too much electricity for "X"? The article is a bit light on details. Thenagain, maybe this is just business as usual in a country on the verge of collapse.
Government doesn't like it, therefore government shuts it down. If it wasn't for "affecting stability of electricity supply", it would probably be "affecting stability of the economy" or something else.
And remember it's not just a matter of having money. Everything is rationed harshly, so you can't just go into a grocery store and fill up your cart everyday, even if you happen to have money which most people do not.
The irony is that oil is effectively free. No food but plenty of oil. Most of the problems are the result of government leadership making bad decisions over a long period.
If you're traveling down there for business ask what you can bring to donate. If you fill up all extra space in your luggage from the US it can be a godsend to bring diapers, and other stuff that is hard to get but desperately needed.