The Simon Bolivar Hydroelectric Power Station, also known as “El Guri,” is one of the largest hydroelectric power plants in the world.
I have never feared for the safety of anyone I have collaborated with on an interview. Many people put their lives and families at risk for what I am about to tell you. This is one of those stories I never expected to write, but I feel compelled to tell it as honestly as possible.
I recently published, “Ground Zero In the Venezuelan Bitcoin Scene” and randomly received a message from an anonymous Twitter account complimenting the article. They also told me that I missed the real story. Of course I asked, “What was that?” They responded alluding to the Venezuelan Government’s involvement in Bitcoin mining. I thought to myself, now there is a story.
I sent a message back asking if they would be interested in doing an anonymous interview about this. They got back to me with, “I won’t be able to provide proof of how mining is being abused by the government, but I’ve seen it and know people who have helped set it up.” Of course I was intrigued, but also skeptical. I fired off another message trying to nail down an interview and provided an encrypted email address. I got no response. I saw the account active on Twitter over the next few weeks and assumed they were not interested.
I, for the most part, had written the story off. I asked my previous sources in Venezuela if they would be interested in helping me connect with a Venezuelan Bitcoin miner and was met with resistance and shut down on all fronts. I was told, “It is way too dangerous. Miners are very secretive. No one is willing to talk.”
Four weeks later, I randomly received an email from a person claiming to be a Venezuelan Bitcoin miner willing to do an interview. I let them know that I would not ask questions about who they were and assured them I would keep their identity secret. I told them I would refer to them as Mr. X. As we communicated back and forth, the trust factor grew. Despite the language gap, we started piecing together this interview through emails.
Venezuelan Police task forces are intimidating and miners are beholden to their power.
Oftentimes weeks would pass between Mr. X’s emails. Just when I assumed the story was dead, once again my Venezuelan friend’s email would show up in my inbox. I felt selfish responding with more questions and clarifications to his questions. As I read and re-read his emails describing Bitcoin miners being hunted, raided, extorted and arrested by local police and confirmation of the rumors of state level Bitcoin mining going on, I realized the magnitude of risk Mr. X was taking.
The back and forth between Mr. X and I went on for almost three months. I feared every day for his safety and still do, as well as the many Venezuelan people putting their lives at risk mining Bitcoin. Who would have ever thought that Bitcoin mining would be a cat and mouse game of trying to outwit and deceive government and police task forces? Then again who would’ve thought that Bitcoin mining would be so lucrative to where families are living off the Bitcoin ecosystem.
During our back and forth many new twists and turns within the Venezuelan government unfolded regarding Cryptocurrency. The first was the announcement of a Government Bitcoin mining registry where, yes imagine that, anyone mining Bitcoin is now required to register with the government. Adding to this, the President Maduro is also starting the new Venezuelan Crytpocurrency, the Petro. The coin is claimed to be backed by Venezuelan oil.
With so much going on in Venezuela, it was hard to keep this interview completely about Bitcoin mining. Mr. X and I did our best to give the world a real-life perspective on how people are living and surviving off Bitcoin and Bitcoin mining in Venezuela. Due to the delicate nature of the subject matter, I allowed Mr. X the freedom to answer or not answer whatever he wanted. There was no way for me to confirm the facts on his story, but I have every reason to believe the things he says are true.
One last thing to clarify. Not every Venezuelan can afford Bitcoin mining equipment or Bitcoin for that matter. In no way do we want to paint the picture that everyone in Venezuela is living off Bitcoin mining or Bitcoin. Usually, the Bitcoin miners consist of middle to upper class Venezuelans who have the money to purchase the equipment needed to mine. This puts the impoverished Venezuelans even more at a disadvantage to the rest of their countrymen in this struggling economy.
An original photo sent to me during this interview of an S9 Antminer currently used by Mr. X in Venezuela. To put it into perspective, one S9 can feed a family.
Because mining isn’t regulated yet and many miners in Venezuela have gotten in trouble.
Right now it means everything because through such activity you can defeat the economic catastrophe that we are facing by bypassing the currency exchange control. My whole attention is on this business.
Grocery shopping in Venezuela is a frustrating all day affair with long lines and limited selection.
You get to feed your family and to be able to save some money for the future among other benefits that comes with a surplus balance.
If you need local cash right away, then you’ll probably end up selling some btc at localbitcoins.com to deal with your living expenses. If not, then it is stored mainly on coinbase and exchanges. Cold storage is not the culture yet.
Like I said, for local expenses, you will need to drop btc in exchange for Bolivars since there isn’t almost any shop that will take your btc in a regular way. If you are buying more mining gear to increase or keep your business, then you’ll have to exchange btc for bch (only when doing so directly at bitmain’s).
Here is an example of a Trezor hard wallet.
From what I’ve heard and seen, the most popular wallet around here is Coinbase sadly. I always tell people to get a cold storage device such as Nano Ledger or Trezor. People also love Uphold, because it lets them convert BTC to USD fiat that goes directly to their USD bank account.
It usually only happens in the medium-to-high-class range given that people in poverty cannot afford the equipment. In that range, it could be something like one out of five. However, you should note that some Venezuelans are running to set up very big farms in the United States given that they won’t face any extortion up there, and it is only three hours away by air.
That is interesting. It seems like the whole equipment supply chain from manufacturer to buyer appeared out of nowhere. That is partly because some people decided not to mine but to buy and sell the equipment. There is enough equipment to where friends are usually talking about deals from other people on mining gear.
Mr. X says there is no short supply of Bitcoin mining equipment making its way into Venezuela.
Supposedly they do, but then I don’t get how all the equipment gets here. I heard that when it comes directly from China in containers they seize it.
First of all you don’t talk about it with anyone. You only talk about it with the people you trust. You can join the market pretty fast if you want to.
An example of a BTC mining farm in China (We couldn’t get a photo of a VZ farm).
Interesting too. There is always someone smart enough to learn how to connect the equipment and most of the time he ends up being “the guy.” “I know a guy who did all that for me and charged me $X” The thing is you don’t want strangers in your mining facility because anything could lead you to the extortion party. Even the guy who sets you up with the cooling system could betray you later that night when drinking a beer with his felonious neighbor at their suburb hometown.
There’s no way to tell but easily in the thousands and possibly over one hundred thousand. The word on the street is that basically any physical space with an electric service is a hosting space.
They are making a lot of money, and the big farms are making even more money given that the electricity cost is ridiculously cheap.
Powering up Caracas at night is no easy task. 74% of Venezuelan electricity comes from renewable energy like hydro electric power which is cheap to produce.
0.0000125$ per kW/h (no those are not Satoshis, those are dollars rated at black market)
In terms of food you will gain weight. In terms of necessities you could afford almost anything you need to live according to your life status. Insurance, food, tuition, utilities and almost any regular expense becomes affordable. Even for those whose income is in Bolivars utilities are meaningless.
It is interesting enacting such law, but we must wait to see how it goes. I mean until the humanitarian problems that we live in are solved, the corruptive behavior isn’t going anywhere. People are not allowed to mine gold or diamonds from the surface, so why would it be any different with digital treasures?
To find out who is mining and how much you are making.
I hope not.
I guess the bravest will jump in first while the rest of the audience waits to see how it goes.
Not nice. Extortion, beating, detention.
Yes, sometimes the police squad that visits your place decides to seize your mining equipment, and there is absolutely nothing you can do about it.
Rumor has it they install them on government facilities.
This is the worst case scenario, but I’ve heard multiple stories like this. If for some reason they don’t like you at all during the raid, they would confiscate your equipment and have you install it for them. They even “hire” you as an infiltrator and they make you rat out other miners.
There is an intelligence police division exclusively for mining hunting. They accomplish so by monitoring electric power consumption looking for irregular situations.
Venezuelan police shooting tear gas into crowds of protesters last year in Caracas.
I’ve heard $1,000 per machine but again, it depends. I guess the more Bitcoin’s value grows, the more they will ask.
I can’t tell you for sure, but my guess is every squad member will take a piece including big bosses.
I wouldn’t advise so. Probably you’ll get both arrested and beaten up.
President Maduro in full regalia making a speech with his top brass.
Rumor has it the capital city military’s headquarters is full of Antminers.
Besides having to deal with one of the slowest internet speeds in the world, we have to live with the fact that it isn’t even stable.
Every length of mining activity must be concealed.
Same way you learn to do anything in this lifetime: google, YouTube, etc.
One of Mr. X’s S9 Antminers.
I only do Bitcoin mining. I personally don’t care about any other cryptocurrency. For me a couple of S9s are enough.
The more you invest, the more you will earn, but only one gear’s production is enough to live from.
More than $100,000 and some more than that.
When it comes to utilities, Venezuelans are gifted in terms of price. Electric power is cheaper than water, if I tell you how much a full house’s bill is, you wouldn’t believe me.
For miners it’s a great tool because you can drop some of your btc earnings in exchange of local currency.
Don’t do more than two workers per location.
Their income in BTC or any other cryptocurrency is huge in terms of Bolivars meaning that immediately you become a high class citizen.
By not squandering it on the streets.
Almost everyone middle class and up are talking about BTC. Even military officers are using Coinbase to buy in with fiat and to store their BTC.
A basket full of stacks of Bolivars like this will barely buy you lunch.
You don’t see that much btc offering for sell in black market. I guess people are just HODLing but once in awhile you hear about a big sell offer e.g. 30 btc to be paid in usd cash. That is usually the police looking for liquidity.
Maybe they are trying to bypass the dollar mafia by selling oil in a different currency, but we all know what happens to every country who has attempted so. Ask the middle east.
From what I understand it is a commodity-tether since its value is pegged to an oil’s barrel. So even if it gets listed on the main exchanges, how do you freeze the price? Tethers works as a market base so in any case bitcoin must be traded against Petro. So 1 BTC ~ 300 Petros ?
Maybe Russia and China are doing a crypto experiment with Venezuela which they didn’t dare to do with their own nations.
It comes from the same government that destroyed the former currency so it doesn’t start well but at the same time people is looking desperately for a local alternative currency.
Because our nation’s wealth is mostly use for geo-political purposes and any country can’t afford both challenging the United States hegemony and enjoying inside welfare.
They are buying through localbitcoins.com and some other exchanges. They are a few local one’s where you can buy in with Bolivars.
Read and learn everything you need to know about this technology so no one can scam you.
Not as much as if I join a political opposition party.
We are great and we are going to prove it. Geography has given us everything. We are at the north of the south and one of the richest countries at the same time (in natural resources).
By getting a good quality bitcoin content in spanish and allowing us to join outside exchanges.
What is Cuba? What is Syria?
Venezuela faces many tougher challenges than Bitcoin mining. Government protests like this are common.
After finishing this interview, I let it simmer for a few weeks. There was a part of me that did not want to publish it. As I edited the text, I felt like I was reading a fiction novel. Most importantly I did not want to create any problems for anyone involved. I sent Mr. X one last email with the entire transcript of this interview. I told him the only way for us to tell this story is to TELL THE STORY! I asked him to read through it and think long and hard about everything we had written. I gave him one last chance to make any final edits and the option to shit-can the story all together if he pleased.
A few days later, Mr. X got back to me. He made a few small tweaks and said everything looked good. I will never know Mr. X’s identity nor do I care. I do not believe he is the same anonymous Twitter profile that originally contacted me. Mr. X’s english and typing skills were a lot better. This is the part of the story that will always remain a mystery to me. My only hope is that I did him and the Venezuelan Bitcoin miners justice in writing this story. Viva la resistance!
Special thanks to Mr. X and all the people who helped make this story happen. If anyone wishes to translate this article into Spanish or any other languages, please feel free to do so. Please just remember to credit @piratebeachbum, coinstrategy.io and Hackernoon.com.
The best way to help our Crypto friends in Venezuela is to share this article. That is… if you don’t think it sucks. #Knowledgeispower