Venezuela Bans Crypto Mining to Conserve Energy Amid Power Crisis

Venezuela has recently banned crypto mining firms due to their heavy energy consumption.

According to local news, Venezuela’s Ministry of Electric Power plans to cut off crypto-mining companies from the national power grid, SEN (Sistema Electrico Nacional). The government aims to control excess energy consumption and ensure a consistent power supply for the local population.

Venezuela’s National Association of Cryptocurrencies confirmed the ban on the crypto mining industry in a May 18 post. This move follows the recent seizure of 2,000 cryptocurrency mining devices in Maracay as part of an anti-corruption drive.

The Electric Ministry emphasized the need to provide efficient and stable electrical service throughout Venezuela by addressing the stress on the national energy grid caused by energy-intensive mining firms. Officials state these restrictions are essential to stabilize the country’s power supply, which has experienced heavy fluctuations over the last decade.

Venezuela has faced an ongoing power crisis since 2009, with conditions worsening due to massive blackouts in 2019 that left towns and cities without power for over a week. Frequent outages have deteriorated residents’ daily lives and overall economic activities.

Cryptocurrency mining demands significant electricity. Countries like China and Kazakhstan have imposed strict regulations or outright bans on the activity to preserve their power grids, centralizing mining in fewer locations.

The Venezuelan government’s crackdown on cryptocurrency mining is part of a broader anti-corruption effort, resulting in the arrest of several high-ranking officials.

Joselit Ramírez, the former head of the National Superintendency of Cryptoassets, is a central figure in the corruption allegations. Rafael Lacava, governor of Carabobo state, noted the importance of public collaboration in identifying illegal mining operations and encouraged citizens to report any unlawful activities.

“If you, a neighbor, see a house that you know, tell that person to turn off the farm, or if not, report it, because when they take away the electricity you have to give light to a man so that he can earn a few reais (money), you are left without electricity.”

Experts attribute the crisis to poor maintenance and inadequate investment in the power grid. The government, however, blames sabotage and has promised to modernize the state-controlled power network.

This is not Venezuela’s first action against crypto mining activities. Last September, Venezuelan authorities seized Bitcoin mining machines from a gang-controlled prison alongside weapons. Over 11,000 soldiers were deployed in that raid.

Venezuela’s regulators suspended Bitcoin mining operations in March following investigations into an alleged corruption scheme involving cryptocurrency wallets to redirect funds belonging to Petróleos de Venezuela SA (PDVSA), a state-run oil company.

For more updates on cryptocurrency and finance, stay tuned to Global Crypto News.