On a factory floor in Caracas, the din of dozens of computers working non-stop is deafening. This is the sound of a bitcoin mine — one of several in a country where cheap electricity has made cryptocurrency mining a rare profitable endeavor.
At the enterprise called Doctorminer, in eastern Caracas, nearly 80 computers — worth about US$400 apiece and each the size of a shoebox — generate about US$10,000 in bitcoin equivalent per month.
The process produces intense heat, which requires the constant cooling power of four large fans.
The electricity bill for all this?
“I think not even US$10 a month,” said Theodoro Toukoumidis, chief executive officer of Doctorminer, which was founded to erect cryptocurrency mines countrywide and provide the required machines.
“We have discovered a way to generate income effortlessly ... transforming energy into money,” he said.
In a country in recession and contending with the world’s highest inflation of nearly 3,000 percent last year, cryptocurrency mining presents an economic opportunity for a lucky few.
This is made possible by one of the world’s lowest electricity prices: The commodity is heavily subsidized by the Venezuelan government.
“Mining” is one way of producing cryptocurrency, putting high-powered computers to work to solve complicated mathematical problems — and the price of electricity is a major obstacle for miners in many countries.
Yet the rock-bottom rate in Venezuela overrides most other considerations, including power cuts — frequent in a country where public services have all but collapsed, but less spotty in the capital, Caracas, than elsewhere.
Nor are cryptopreneurs in Venezuela put off by Latin America’s third-lowest fixed broadband Internet speed.
“To mine you don’t need super-high-speed Internet,” cryptocurrency researcher and economist Aaron Olmos said.
Toukoumidis sold his car and his partner a motorcycle, each to buy a mining computer.
In 2016, in the dining room of his house, the pair began to build computers to sell.
The venture proved popular, with many people wanting to invest, even “without understanding anything at all” about cryptocurrency mining, Olmos said.
Today, Doctorminer has about 1,500 miners connected to its grid, the company’s Web site says.
As the value of the bolivar has been decimated by years of economic crisis, bitcoin has become increasingly accepted as currency in Caracas.
“Having crypto money is a way out of hyperinflation ... an extra tool for confronting the crisis,” Olmos said.
According to Olmos’ consulting outfit Olmost Group Venezuela, transactions with cryptocurrency peaked at US$303 million in Venezuela in 2019, before the COVID-19 pandemic.
This is nowhere near the full value of cryptocurrency in circulation, as it does not factor in the currency generated by mining, he said.
“There is a massive economic activity that is unseen,” Olmos said.
Pedro, a miner, bought two “video cards” with which to mine cryptocurrency in 2017 for US$800.
He said he made his money back in three months, estimating that he has earned about US$20,000 in total.
However, the windfall brought about unforeseen difficulties — the reason Pedro declined to give his full name.
The currency and the practice of mining it are legal, but police frequently arrest miners for failing to jump through bureaucratic hoops.
Reports of extortion are rife in the country that ranks a lowly 176 out of 180 on Transparency International’s Corruption Perceptions Index, and where public officials demanding bribes is a common problem.
Many Venezuelan miners end up behind bars for lacking paperwork, specialist Web sites such as CriptoNoticias say.
“It is something that is better not to talk about,” added Pedro, of his line of work.
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