Venezuela Crypto Sector in Shamble Amidst Ban on Mining

Recently, the crypto industry in Venezuela has entered an uncertain phase following a temporary ban to stop crypto mining activities in the territory.

Criminal activities traced to a crypto wallet linked to one of the state-owned establishments triggered a serious investigation that necessitated the ban on mining in Venezuela.

Venezuela’s Reasons for Ban on Cryptocurrency Mining

As of June 21, 2023, Bloomberg, via its Twitter handle, shared that Venezuela is facing a momentary ban on crypto mining activities. The report noted that this issue has waned the country’s President Nicolás Maduro’s efforts to promote cryptocurrency in the country.

Notably, Bloomberg also reported that the temporary halt on cryptocurrency mining is killing the crypto sector of Venezuela. As of now, about 75,000 units of crypto mining apparatus have stopped operations.

Meanwhile, the brief halt on mining crypto first started in March. An investigation linked a notorious group to a crypto wallet through which payments made to the state-owned oil company, Petróleos de Venezuela SA, were diverted.

President Maduro discovered that some of his key members in the Petro project, Rafael Darío Ramírez and Hugbel Roa, the country’s technology minister, were allegedly involved in the corruption.

Notably, after the confirmation, Venezuela’s National Association of Cryptocurrencies revealed that orders were made to stop crypto mining in states like Carabobo, Lara, and Bolivar.

Venezuela’s Cryptocurrency, Journey, And Assets Petro

Venezuela created a cryptocurrency to replace its national currency, Bolivar. The initiative for the project came due to serious political and economic crises which caused hyperinflation in the country.

So, to mitigate this, President Maduro proposed the Petro digital currency project to be an alternative to the declining Venezuelan currency in December 2017.

The Venezuelan government took advantage of its natural resources and executed the cryptocurrency project. On February 20, 2018, BBC reported that Venezuela launched its own cryptocurrency, “Petro,” backed with crude oil. 

Notably, Aljazeera stated that Venezuela’s government-backed Petro with gas, oil, diamonds, and gold so that the country could avoid EU and US sanctions. Aljazeera further reported on May 23, 2018, that President Maduro disclosed that Petro raised over $7.3 million on its first presale day.

Meanwhile, TradingView stated on June 19, 2023, that the Venezuelan crypto project was an instrument to evade the sanctions levied on Venezuela by the Obama and Trump administrations.

BBC insinuated that the crypto project could mitigate the effect of hyperinflation in the country since the end of World War II, which had made many Venezuelan citizens resort to digital assets like Bitcoin.

Notwithstanding the Venezuelan government’s hard work to make its citizens embrace the crypto industry, the government still imposed a ban to halt crypto mining activities.

This move will affect its owned digital currency, Petro, in a bad manner as holders may fear losses in value and utility, thereby forcing them to dump it.