Venezuela Crackdown on Crypto Mining to Save Power Grid

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The Venezuelan government has announced a comprehensive ban on cryptocurrency mining to safeguard its national power grid. This move adds Venezuela to the list of countries addressing the significant energy demands of crypto mining through tough regulations.

According to local reports, Venezuela’s Ministry of Electric Power has initiated plans to disconnect all cryptocurrency mining farms from the national grid. This decision aims to lessen excessive energy consumption for the population as there are reports that Venezuela has experienced frequent blackouts over the past five years.

Implications of Venezuela Crypto Mining Ban

The ban on crypto mining in Venezuela was officially confirmed by a post from the National Association of Cryptocurrencies on X.

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This crackdown is part of a broader anti-corruption effort, which recently led to the confiscation of 2,000 cryptocurrency mining devices in Maracay. Meanwhile, several high-ranking officials have been arrested including Joselit Ramírez, the former head of the National Superintendency of Crypto assets.

Notably, the Ministry of Electric Power emphasized the need to deliver efficient and reliable electrical service across Venezuela to the citizens. The ministry cited the heavy strain that cryptocurrency mining imposes on the power grid and urgency to safeguard the grid.

Furthermore, there is an urgent need to halt the severe and recurring power outages, especially since 2019, which is affecting both daily life and the economy.

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Crypto Mining Regulations

Venezuela’s move mirrors actions taken by other nations like China and Kazakhstan. These countries have either imposed strict regulations or carried out complete bans on cryptocurrency mining to address similar energy consumption issues.

Meanwhile, Rafael Lacava, governor of Carabobo state, has urged the public to assist in identifying illegal mining operations, even encouraging citizens to report any suspicious activities. This whistleblowing approach is to enhance the effectiveness of the government’s crackdown.

Historical Context of Crypto Mining in Venezuela

This crackdown is not Venezuela’s first action against crypto mining. In March 2023, the country’s energy supplier shut down mining facilities nationwide as part of an investigation into corruption within the state oil company. There was a prison raid in September of the same year where Bitcoin (BTC) mining equipment, rocket launchers, and grenades were also seized.

At that time, Attorney General Tarek William Saab revealed that government officials were allegedly involved in running parallel oil operations with the help of the national crypto department. Even the US government in the past, accused Russian-Venezuelan group of using crypto to smuggle oil and military equipment.

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