As the economic crises in Venezuela and Zimbabwe further deepen, more and more citizens are turning to Bitcoin mining in order to survive.
Bitcoin is taking over Venezuela and Zimbabwe
In the last couple of months, the economic crisis in Venezuela has affected more and more citizens. The current financial situation in Venezuela was mainly caused by the rapid rate of inflation that got out of control. As the hyperinflation caused a huge value loss for the Venezuelan bolívar, many citizens and businesses resorted to using cryptocurrency such as Bitcoin and Litecoin in order to pay for daily goods and services.
But Venezuela isn’t the only country that experienced a rapid growth of cryptocurrency usage. Zimbabwe is also going through a deep economic crisis that affected many citizens and businesses in the whole country. Zimbabwe’s enormous demand for Bitcoin has caused the price of one Bitcoin to skyrocket to as high as $10,000 on the only cryptocurrency exchange of Zimbabwe. Many experts believe that Venezuela and Zimbabwe are experiencing a very interesting social and economic shift thanks to the rampant cryptocurrency adoption.
Turning to mining in order to survive the crisis
More and more people in Venezuela are turning to mining cryptocurrencies like Bitcoin, Litecoin, and Ethereum in order to afford necessary goods and services. Since the electricity in Venezuela is heavily subsidized by the government, the mining costs are extremely low, making mining more lucrative compared to countries where the electricity costs are much higher. According to a recent article by AFP, there are about 100,000 people in Venezuela that are currently mining Bitcoin and other cryptocurrencies. Many miners in Venezuela were forced to hide their mining activities through VPNs, proxies, and bunkers from government officials. According to ZeroHedge, in the largest cryptocurrency-related raid that was conducted by Venezuelan authorities, 11,000 mining computers were seized. The Venezuelan government accused the miners of cybercrime, electricity theft, exchange fraud, and even supporting terrorist activities.
But miners weren’t the only ones that got affected by the political pressure. In February 2017, after receiving heavy pressure from its bank, Surbitcoin, Venezuela’s most popular cryptocurrency exchange was forced to close its operations for 2 weeks and to halt fiat withdrawals. According to the popular bitcoin exchange, LocalBitcoins, the trading volume in Venezuela reached a new high of $1.1m in the last week of September. Political activists believe that Maduro is going to take harsher and more drastic measures against cryptocurrency mining and trading in the future.
As for Zimbabwe, people are turning to Bitcoin mining and wallet referrals to generate an income. Unlike Venezuela, the economic crisis in Zimbabwe was brought about by not having enough printed currency to satisfy the demands of the populace. Rampant inflation led to the government switching to the US dollar as their core currency, but the main problem now is that they have not been able to import enough of the US greenbacks into the country. While the Bitcoin community in Zimbabwe is small, it is vibrant and growing.
What are your thoughts on the recent rise of cryptocurrency mining in Venezuela? Do you think that cryptocurrencies might become a de-facto currency in Venezuela and Zimbabwe? How do you think authorities will react to that? Let us know in the comments below!
Images courtesy of Pixabay.