Mon, Oct 23, 2017 - Page 14 News List

Caracas bitcoin miners outrun inflation, police

AFP, CARACAS

Inside a locked room in an office building in Caracas, 20 humming computers use their data-crunching power to mine bitcoins, an increasingly popular tool in the fight against Venezuela’s hyperinflation.

In warehouses, offices and homes, miners are using modified computers to perform complex computations, essentially bookkeeping for digital transactions worldwide, for which they earn a commission in bitcoins.

While practiced worldwide, bitcoin mining is part of a growing, underground effort in Venezuela to escape the worst effects of a crippling economic and political crisis, and runaway inflation that the IMF has said could reach 720 percent this year.

Having no confidence in the bolivar and struggling to find dollars, many Venezuelans, who are neither computer geeks nor financial wizards, are relying on the bitcoin — yesterday valued at about US$5,832 — or other virtual currencies.

Caracas office worker Veronica said her boss installed the 20 machines in early 2015.

“These are machines that bring in US$800 a month [more than 26 million bolivar],” said Veronica, who refused to give her full name because of fears of arrest.

Bitcoin mining consultant Randy Brito estimates that about 100,000 Venezuelans are “mining,” although it is impossible to have an exact figure because many are protecting themselves by using servers in foreign countries.

Brito said the boom in these virtual transactions began in 2014, when Venezuela’s economic crisis intensified as a result of the collapse in the price of oil, which accounts for 96 percent of the country’s revenue.

“Whoever buys bitcoins with bolivars earns money by increasing the price of the bitcoin against the dollar and escapes inflation,” Brito said.

Tempted by the money made by her boss, Veronica has taken the plunge at home, buying a machine online from China for US$2,280.

“A friend took another and a boy I know bought 20,” Veronica said. “People are buying machines like crazy.”

They set the machines up in another woman’s house, as many miners do to spread the power consumption and avoid attracting the attention of the state intelligence service, Sebin, whose agents regularly raid buildings when they notice a suspicious surge.

“If they find machines, they arrest the owners or they try to extort money,” Veronica said. “In electricity, we spend barely 15,000 bolivar a month [less than US$0.50 at the black market rate].”

According to the LocalBitcoins portal, transactions in bitcoins amounted to US$1.1 million in Venezuela in the last week of last month.

Commissions, paid in bitcoin, help buy food and medicine that are currently in acutely short supply because of the crisis, said Eugenia Alcala, founder of Dash Caracas, which provides courses in cryptocurrency mining.

Veronica said her machine is producing 20 to 25 litecoins — another virtual currency — per month.

“Each litecoin is worth US$46, that’s US$920 a month,” Veronica said.

That is a fortune in a country where the minimum monthly salary is 135,543 bolivar (US$40), supplemented by a voucher of 189,000 bolivars (US$56).

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