Venezuela cuts off crypto mining to tackle energy crisis

Venezuela has become the latest country to ban crypto mining companies, citing heavy energy consumption.

According to local news outlet AlbertoNews, Venezuela’s Ministry of Electrical Energy is planning to cut off crypto mining companies that receive power from the national power grid, SEN (Sistema Electrico Nacional).

With its latest move, the Venezuelan government plans to control excessive energy consumption while ensuring a consistent power supply for the local population.

The National Cryptocurrency Associations of Venezuela also confirmed the latest ban on the crypto mining industry in a May 18 post. The move follows the recent seizure of 2,000 cryptocurrency mining devices in Maracay as part of the fight against corruption.

#Official Mining of Criptomoneda is banned in Venezuela.

— Asonacrip (Asociación Nacional de Criptomonedas) (@AsonacripVe) May 18, 2024

The Ministry of Electricity underlined the need to provide efficient and stable electricity service across Venezuela, citing the stress caused by energy-intensive mining companies on the national energy grid.

According to officials, these restrictions are vital to stabilize the country’s electricity supply, which has experienced heavy fluctuations over the past decade.

Venezuela has been experiencing an ongoing energy crisis since 2009; Conditions are worsening due to major power outages that left towns and cities without power for more than a week in 2019. Frequent blackouts worsened residents’ daily lives and general economic activities.

Cryptocurrency mining has heavy electricity demands. As a result, countries such as China and Kazakhstan have centralized mining in fewer locations, imposing strict regulations or outright bans on mining activities to protect their electrical grids.

The Venezuelan government’s crackdown on cryptocurrency mining is reportedly part of a broader anti-corruption effort that has resulted in the arrests of several high-ranking officials.

Joselit Ramírez, the former head of the National Crypto Assets Supervisory Authority, is one of the central figures in the corruption allegations.

Carabobo state governor Rafael Lacava noted the importance of public cooperation in detecting illegal mining operations and encouraged citizens to report illegal activities:

“If you see a house that you know is your neighbor, tell that person to close the farm, otherwise report it, because when they cut off the electricity, you have to give light to a man so that he can win. If you buy a few reals (money), you will be left without electricity.”

According to AlbertoNews, experts attribute the crisis to inadequate maintenance and inadequate investment in the electricity grid. But the government blames sabotage and has vowed to modernize the state-controlled electricity network.

This is not Venezuela’s first action against crypto mining activities. Last September, Venezuelan authorities seized Bitcoin mining machines as well as weapons from a gang-controlled prison. More than 11,000 soldiers were deployed in the raid.

Venezuelan regulators suspended Bitcoin mining operations in March following investigations into a corruption scheme involving cryptocurrency wallets to divert funds belonging to Petróleos de Venezuela SA (PDVSA), a state-run oil company.