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]