Why Venezuela is becoming a hub for bitcoin mining?

Crypto mining is showing great productivity in Venezuela, a country troubled by economic difficulty and huge unemployment rates.

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There are two ways to earn bitcoins. One is to buy it from an online exchange with Fiat money, and the other is to mine it in a more complex way.

This is a special process. Miners solve complex mathematical equations to examine each cryptocurrency transaction, and as a reward for their successful efforts, receive crypto coins.

This process requires heavy computers, other equipment and consumes a lot of energy. Therefore, the increase in mining operations in Venezuela has attracted global attention.

Why is an oil-rich nation Venezuela suddenly becoming a hot spot for cryptocurrency miners?

With electricity rates as low as 0.06 cents per kWh, crypto mining is proving extremely profitable in Venezuela, a country plagued by economic difficulty and high unemployment rates.

As well, inflation is moving at nearly 3,000 percent. Thus some people are willing to bet everything on this technology despite the concern of instability normally associated with these virtual coins.

While the lure of rapid wealth creation is urging Venezuelans to get involved in mining, not everyone can become a miner in a South American country, where the minimum fee is around $10.

Many people lack the resources to manage the tools needed for cryptocurrency mining.

There are also some other problems such as frequent power outages and slow internet speeds. However, these barriers are not powerful enough to stop Venezuela or the growing crypto mining industry.

Hyperinflation has left the Venezuelan currency Bolivar behind for many years and has been steadily slipping against the US dollar. For many, cryptocurrency is seen as a way out of hyperinflation.

Earlier, Venezuelan President Nicolas Maduro launched a cryptocurrency called ‘Petro‘ in 2017. He said Petro would cover the way for the South American country to be called a “financial blockade” by his government.

Despite the president’s insistence on popularizing it, Petro failed to win the trust of consumers or investors. On the other hand, Bitcoin has captured the imagination of Venezuela.

Read | Want to Invest in Cryptocurrency?

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