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Crypto mining of crypto currencies could influence Venezuala economy?

7 points by jamesmurray ↗ HN
(Note: This is not a "pro-crypto" post. I am not a crypto proponent nor do I have any libertarian ideologies. I hate the price increases on GPUs, I laughed at Bitcoin when it hit 50k or whatever, etc.)

Shouldn't we expect to see crypto mining of cryptocurrencies (yes crypto-crypto mining) to become prevalent in Venezuela at a scale to influence the economy?

Basically, my argument is that we should expect to see a massive amount of mining from small to moderate scale rigs in the economy. Using the efficient market framework, crypto mining can be seen as conversion of electricity (and the amortized value of hardware) into cryptocurrency.

Because of Venezuela's currency collapse (as well as standard issues of the government propping up electricity prices), there's a huge gulf between electricity prices and the value of USD. My guess is that if you look at the figures, the incentives are truly enormous. This is being exploited by the authorities, but separate to this, but I would expect to see lower-middle class and up to get into mining in a huge way (albeit individually at a low scale).

This is because if I can stash a small rig somewhere, then I can produce currency.This seems like a viable way to save funds at a personal/family level.

If any of the above logic is true, the following questions are interesting:

- Is anyone seeing evidence of this?

- Will this occur on a massive-enough scale influence the provision of electricity?

- Is this one actual use case of crypto currency that can affect history in a benevolent (or at least neutral) way by "democratizing" wealth?

8 comments

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gus_massa
What is your cover up story when the police notice that your electricity bill is much bigger than your monthly salary? Also, do the police want to hail you or they only want a cut?
bitxbitxbitcoin
Venezuela has taken some hostile actions and stances towards miners (the people), and also the import of miners (the ASICs). I'm just waiting to see the day when the cover story for mining becomes growing marijuana. Hopefully it's just a joke, not as a result of mining becoming more illegal than growing!
dbasedweeb
Or worse, when a corrupt official sells electricity usage stats to the criminal syndicates, and suddenly you’re being tortured for your private key, or mining for them?
Latteland
ooh, solar power. Could it be that pot growers (in the states that haven't quasi-legalized it) are using solar power to hide their grow lights? It must happen! Cause I never think of anything new.
wmf
Poor people tend to have high time preference and high loss aversion; both of those work against mining because the breakeven point is both long (relative to hyperinflation) and highly uncertain.

Buying stable cash (USD or EUR) seems like a better choice and AFAIK it's similarly illegal as mining.

jamesmurray
True, but these aren’t conventionally poor but could basically include you and I (assuming you are in the vast majority of the population who relies on labor income and not tied to the ruling class) if we were wiped out by an economic calamity. This is because of how extreme Venezuela’s slide has been.

Secondly, hyperflation seems to incentivize this: even the median crypto currency is going to be a better bet than the nominal currency.

sebleon
Venezuela has some of the cheapest electricity in the world thanks to subsidies... but spikes in your power usage at home will land you in jail [1].

One workaround is pooling power from your neighbors, but the legal risk and setup are enough to deter most people.

[1] https://www.cnbc.com/2017/08/30/venezuela-is-one-of-the-worl...

tim333
Also given it's "one of the world's most dangerous places to mine bitcoin", if I was in Venez and wealthy enough to mine in a meaningful way I'd probably head abroad to do it.