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Yesterday, amidst a stash of heavy weaponry, Venezuelan authorities were surprised to discover Bitcoin mining machines during a raid on the Tocoron prison. The seizure was part of a significant crackdown on the Tren de Aragua gang, notorious for using the prison as their base in Latin America.
The government released an official statement noting that an impressive 11,000 troops stormed the prison in the state of Aragua to tackle the country’s dominant criminal group. And while weaponry was a significant discovery, the seizing of Bitcoin miners became a talking point after videos emerged on social media platforms showcasing rooms filled with these machines.
There were bitcoin miners in one of the most dangerous places in Venezuela👀
Recently, we saw an intervention in Tocorón, one of the most known jails in the country, in which the criminals were in control.
Besides all the weird things that they had, they even had some bitcoin… pic.twitter.com/xEfZfj9NJN
— Javier ₿astardo 🍐🏴☠️ (@criptobastardo) September 22, 2023
Interestingly, for several years, this prison has been under criminal rule. So much so that it boasted of amenities such as a mini zoo and a swimming pool, a stark contrast to the general reputation of Venezuelan prisons being perilous and overpopulated.
The fearsome Tren de Aragua gang, responsible for a wide range of crimes, from extortion and drug trafficking to human trafficking within Venezuela and beyond its borders, became the target of Venezuelan officials for the first time during this operation.
Venezuala’s Dire Economy Motivates the Use of Bitcoin
The reason for the gang’s interest in Bitcoin mining might stem from Venezuela’s economic conditions. The nation has been grappling with hyperinflation. Yet, its electricity market, which is heavily subsidized, almost nullifies power costs. This makes Bitcoin mining an attractive and potentially lucrative endeavor, more so than in many other countries.
Miners employ ASICs (Application-Specific Integrated Circuits), advanced computers, to tackle mathematical problems associated with Bitcoin’s proof-of-work consensus algorithm. This process is energy-consuming, but it’s also rewarding as miners receive new cryptocurrency. In a report from Coin Metrics earlier this year, it was noted that Bitcoin miners raked in $184 million in transaction fees over three months.
However, there’s a twist in the story. The AFP video report pointed out that many of the confiscated machines resembled older models of Bitmain’s Antminers, leaving us to speculate about the profitability of the gang’s operation.
This isn’t a standalone incident. Only a fortnight ago, police in Chile discovered a drug trafficking group in Santiago operating a Bitcoin mining setup.
A successful operation that allowed us to strike a blow against criminal groups
Venezuela hasn’t been kind to cryptocurrency miners lately, especially with recurrent power outages. A momentary ban on crypto mining has nearly obliterated an industry that was once endorsed in the nation, as reported by Bloomberg Línea in June. This clampdown began in March after a corruption investigation revealed crypto wallets were potentially funneling funds from the state’s oil company, PDVSA. Furthermore, in 2019, President Nicolas Maduro expressed intentions to support the national cryptocurrency, the petro, with oil reserves.
However, it appears that the ban had the unexpected effect of bringing the mining business underground, under the control of gangs.
Rounding back to the recent raid, Remigio Ceballos, the Interior and Justice Minister, informed the media that four prison guards were detained under suspicions of assisting the criminals. While 1,600 inmates were shifted elsewhere post-raid, a few seized the chaos as an opportunity to flee. Ceballos shed light on the grim reality behind the prison walls: gang leaders subjugated fellow inmates, essentially treating them as slaves. The vast array of confiscated items included explosives, sniper rifles, bullets, machine gun ammo, rocket launchers, and grenades.
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