Venezuela wants to disconnect all crypto mining farms from the power grid

All crypto mining farms in Venezuela that are fed by the National Electricity System (SEN) are to be shut down. This was announced by the government in Caracas at the end of last week.

In an Instagram post, the Venezuelan Ministry of Energy (Mppee) writes that it has initiated "a special load control plan" via the National Electricity Company (Corpoelec) together with the Public Prosecutor's Office, targeting "users with high consumption related to digital mining". "The aim is to disconnect all cryptocurrency mining farms in the country from the SEN in order to avoid the high impact on demand and continue providing an efficient and reliable service to the entire Venezuelan population," the ministry's publication states.

The announcement came just hours after a Bitcoin mining farm in Maracay, in the state of Aragua in the interior of the country, was raided last Thursday. According to local media reports, 2,304 Bitcoin mining ASICs, model S19J Pro from Chinese manufacturer Bitmain, were confiscated by the authorities.

High-power consumption due to crypto mining

Recently, government agencies in Venezuela have increasingly pushed to limit the power supply to Bitcoin mining farms. The governor of the state of Carabobo, Rafael Lacava, and Venezuela's energy minister, Jorge Márquez, have called for a reduction in the activities of such mining farms, as the high electricity consumption has led to repeated power outages around mining farms. In Carabobo, the state has confiscated 11,000 Bitcoin machines.

Lacava announced that more confiscations will follow and pointed out that he does not want cryptocurrency mining. "That is absolutely rejected in Carabobo," he said. The governor believes that digital mining is partly responsible for the increasing power outages. The mining farms would be closed temporarily or permanently, Lacava said, "because we need those megawatts". He called on residents to report the operation of farms in their communities to the authorities, and announced that he would order hourly restrictions on the work of the public administration in Carabobo to reduce the demand for electricity.

Corruption scandal as a catalyst

The background to the crackdown on the mining farms could also be last year's corruption scandal surrounding the state oil company Petróleos de Venezuela (PDVSA), in which officials from the state-run national supervisory authority for cryptoassets SUNACRIP were also involved, according to media specializing in cryptoassets. SUNACRIP was placed under the control of a state restructuring body following the arrest of several executives for alleged irregularities involving funds from oil transactions carried out with cryptoassets. The PDVSA case in turn led to the resignation and arrest of the powerful oil minister Tareck El Aissami. At the beginning of this year, the state cryptocurrency Petro was also quietly discontinued. Here, too, there is said to be a connection to the PDVSA corruption scandal.

The use of cryptoassets has increased in Venezuela lately, not least due to hyperinflation. More and more Venezuelans have taken refuge in cryptocurrencies to protect their financial assets from devaluation. Others found income opportunities in the face of the severe economic crisis by founding or working for digital mining companies. What's more, electricity is extremely cheap in Venezuela - a legacy of years of state subsidies.

(akn)