Venezuela bans cryptocurrency mining to protect power grid

The Venezuelan government has joined the list of countries that frown on cryptocurrency mining due to its massive electricity needs.

According to local news outlets, Venezuela’s Ministry of Electric Power (MPPPE) has revealed plans to disconnect cryptocurrency mining farms from the national power grid. The measure aims to regulate excessive energy consumption and ensure a stable power supply to the public.

An X post from the National Cryptocurrency Association of Venezuela states that cryptocurrency mining is banned throughout Venezuela. This move prioritizes energy security over the burgeoning cryptocurrency mining industry.

The move follows a recent crackdown that saw the seizure of 2,000 cryptocurrency mining devices in Maracay, Aragua state, about 120 kilometers southwest of Caracas, as part of an anti-corruption initiative.

The Ministry of Energy emphasized the need to provide efficient and reliable electricity services throughout Venezuela by eliminating the burden caused by these high energy consumption farms. According to officials, these measures are essential to stabilize the country’s electricity supply, which has been unstable over the past decade.

In particular, since 2019, the country has experienced repeated power outages, which have had a significant impact on residents’ daily lives and overall economic performance.

Cryptocurrency mining is notorious globally for its massive power demands. In response, countries such as China and Kazakhstan have implemented strict regulations or outright bans on the practice to protect power infrastructure and prioritize energy allocation to critical public services.

The government’s move against cryptocurrency mining has reportedly been part of a larger anti-corruption effort and has resulted in the arrest of several senior officials. Joselit Ramírez, the former head of the National Cryptocurrency Supervisory Authority (Sunacrip), is a key figure in these corruption allegations.

Related: GoMining CEO Is Optimistic About Bitcoin: “The Mining Business Is Still Profitable”

Rafael Lacava, governor of Carabobo state, reportedly emphasized the importance of public cooperation in uncovering illegal mining activities. He encouraged citizens to report illegal activities, emphasizing the important role community involvement plays in protecting the reliability of electricity supply.

However, this is not Venezuela’s first action against cryptocurrency mining activities. In March 2023, Venezuela’s energy supplier reorganized the country’s cryptocurrency department and shut down cryptocurrency mining facilities across the country pending a corruption investigation involving the country’s oil company.

Venezuelan Justice Minister Tarek William Saab published It has been reported that government officials are running a parallel oil business with the help of the national cryptocurrency department.

Last year, eight major cryptocurrency mining operators in Kazakhstan signed an open letter to President Kassym-Jomart Tokayev complaining about high energy prices for miners.

magazine: The Real Risks to Ethena’s Stablecoin Model (It’s Not What You Think)