Venezuelan President Nicolas Maduro had launched a cryptocurrency called 'Petro' in 2017
- Miners solve complex mathematical equations to verify crypto transactions
- A surge in mining operations in Venezuela has drawn global attention
- Many Venezuelans lack the necessary equipment to mine cryptocurrencies
There are two ways to earn Bitcoin. One is by purchasing it with fiat money from an online exchange and the second more complex way is by mining it. It is a specialised process. Miners solve complex mathematical equations to verify each cryptocurrency transaction and as a reward for their successful effort, earn crypto coins. This process requires heavy computers and other equipment and consumes a vast amount of energy. So, a surge in mining operations in Venezuela has drawn global attention. Why is the oil-rich nation suddenly becoming a hot spot for cryptocurrency miners?
With electricity prices as low as 0.06 cents per kWh, crypto mining is proving to be extremely lucrative in Venezuela, a country riddled by economic uncertainty and a high unemployment rate. Also, inflation is running at nearly 3,000 percent. So some people are willing to bet everything on this technology despite fears of volatility usually associated with these virtual currencies. While the lure of quick wealth creation is forcing Venezuelans to get involved with mining, not everyone can become a miner in the South American country, where the minimum wage is around $10. Many lack the resources to arrange the necessary equipment to mine cryptocurrencies.
There are some other problems as well – like frequent power outages and slow internet speeds. However, these roadblocks are not powerful enough to deter the Venezuelans or disrupt a growing crypto mining industry.
Hyperinflation has dogged Venezuela's currency, the bolivar, for several years now and it has continued to slide against the US dollar. Many see cryptocurrencies as a way out of hyperinflation for many people.
Previously, Venezuelan President Nicolas Maduro had launched a cryptocurrency called the 'Petro' in 2017. He said Petro would pave the way of getting around what his government called the American "financial blockade" of the South American country.
Despite the president pushing to make it popular, Petro failed to win consumer or investor confidence. Bitcoin, on the other hand, has caught the imagination of Venezuelans.