Amidst the development of a nationwide financial turmoil, the demand towards Ethereum and Bitcoin are rapidly rising in Venezuela.
In April, the Venezuelan government revealed that the 2016 inflation rate for the Venezuelan Bolivar recorded 274 percent. Yet, economists and experts revealed that the actual inflation rate of the Venezuelan Bolivar has been far higher, with reports suggesting that the inflation was as high as 800 percent.
The oil sector, which the Venezuelan economy is primarily based on, has also been on a downward trend, as the industry declined by 12.7 percent in 2016 alone. The continuous decline in the country’s oil sector, increasing inflation rate of the Venezuelan Bolivar and the lack of jobs have left the vast majority of the country’s population starving, with young graduates struggling to find jobs that provide sufficient salary to support households financially.
Cointelegraph revealed that some Venezuelans have been relying on Bitcoin to survive. Some local residents including Alvaro have continued to mine Bitcoin and sell the digital currency to obtain food through online service providers such as Amazon.
Although mining has been declared illegal by the local government, due to the lack of resources, foods, jobs and opportunities, young graduates and professionals have turned toward Bitcoin and Ethereum mining.
Also, because cryptocurrencies including Bitcoin and Ethereum are currently being sold in the country at a high premium due to overwhelming demand, an increasing number of technology savvy graduates and professionals have begun to mine digital currencies.
“At the end of the day Bitcoin has been a lifesaver for Venezuelans like me, trying to preserve the effort of our work, and an alternative to our regulated financial system, which gives people that decide to keep living in this beautiful country to continue struggling to survive without giving up and pushing forward our homeland,” Alvaro said earlier this year.
Recently, Block Channel, an organization focused on reporting on socio-cultural and economic issues related to Blockchain technologies such as Bitcoin and Ethereum, revealed that local miners are also starting to look into altcoins such as Ethereum and Zcash.
“Mining Bitcoin became something out of a spy movie, miners were arrested on false charges, people started to get more paranoid than usual. But then Ethereum became popular and very profitable. GPUs are cheaper to import, and don’t attract too much attention. I started with R9 380 2GB GPUs, but then they stopped working for Ethereum mining due to the DAG file size increase, so I pointed them at a ZCash pool,” said David R.
The mining ecosystem of Venezuela has become extremely difficult for local residents to deal with. In some cases, miners were requested to pay a bribe to the Bolivarian National Intelligence Service, Venezuela's premier intelligence agency, Block Channel revealed.
Despite the crackdown on Bitcoin and cryptocurrency mining by the local government and being forced to pay bribes to local intelligence agencies, miners continue to mine Bitcoin and Ethereum. Mining has become a lifeline to most young graduates and professionals who have found difficulty in supporting their families financially over the past few months.