7 ms·

Venezuela arrests 4 bitcoin miners as trading highs continue

126 points by elmar 10y ago

koolba 10y ago
Of all the places to mine Bitcoin, why Venezuela? Is the electricity subsidized enough to justify all the other headaches associates with running an operation out of there? With the instability of their currency I can understand why someone would want to use or buy bitcoin, but why mine there?
- VMG 10y ago
  > Is the electricity subsidized enough to justify all the other headaches associates with running an operation out of there? Yes, it is. Mining cost is overwhelmingly dictated by energy cost. And once you have a small farm running, it should be easy to scale up. Also consider the possibility that they were stealing the power (I think I read that somewhere).
  - olegkikin 10y ago
    You also have to constantly update your mining equipment, because it becomes obsolete within months.
    - celticninja 10y ago
      Months is probably inaccurate mainly because new equipment is not released that often. You may need more equipment to maintain your share but not necessarily updated equipment. Further updated equipment usually helps alleviate the energy usage which in these cases is not as relevant.
      - Bartweiss 10y ago
        The miners I've known don't usually throw everything out. They expand or maintain with new gear when appropriate, and 'expire' the oldest stuff when space gets tight. You're right about the electricity point - replacement schedules are often dictated by power per watt, since improving that expands margins. If power is free or subsidized, hardware costs are a larger part of expenses and it becomes tempting to buy more older gear instead of less fancy stuff. (As an aside, miners are a great place to buy computer parts for that reason - I've known several unloading last year's GPUs dirt cheap. The hardware is run into the ground, but I've seen "if it craps out call me and I'll replace it" deals.)
        celticninja 10y ago
        I cant imagine many people are still mining on GPUs, not since ASICs have become the norm and unfortunately a bitcoin mining ASIC is pretty useless outside of mining for bitcoins.
    - rtkwe 10y ago
      Isn't the main reason that they become 'obsolete' is because their cost to run (pretty much just electricity and per unit cost of the miners themselves) exceeds the expected pay out (their relative hash rate). So by running where electricity is much cheaper older machines that have been discarded can still make sense to run.
      - rudolf0 10y ago
        Really depends. CPU mining is like trying to mine a diamond with a toothpick and will only get worse. If your machine isn't above at least some threshold (unless you have a massive farm of them), you're really just wasting CPU cycles and heat.
        rtkwe 10y ago
        Yeah it doesn't magically make _any_ mining technique profitable again but it does shift the math back towards slower/less efficient ASICs being viable to use instead of just being a waste of money. From the article it sounds like they're using 300 of the Antminer so they're not trying to run CPU or GPU mining not sure where it falls on the current profitability range, I'm not that deep into BTC.
    - deleted 10y ago
      [deleted]
- hueving 10y ago
  >With the instability of their currency I can understand why someone would want to use or buy bitcoin, but why mine there? I suspect you answered your own question. >the electricity subsidized enough to justify all the other headaches associates with running an operation out of there People tend to behave rationally so based on the other prospects, which there aren't many of in Venezuela, Bitcoin mining must have become a useful source of income.
  - Bartweiss 10y ago
    Bitcoin mining is actually a pretty fantastic option - it enables buying subsidized power very cheap, and then generating wealth that's very easy to convert to hard foreign currencies. So it's cheaper to do there than in the US, and more rewarding once you do it.
- climber_mac 10y ago
  I'm from Venezuela, and happen to know a few people that are mining bitcoin down there. Electricity is incredibly cheap! You practically don't have to factor electricity costs in your operation. Yes, the grid is very unstable, but you can always by generators that run on gasoline (which is also incredibly cheap! a full tank of gas for your car will cost less than 0.1 USD.) Now, this is obviously horrible for the environment. But what can you expect when your own currency is being rapidly destroyed by the power-hungry idiots that have taken hold of the country. Let's hope for a brighter future.
  - csomar 10y ago
    Can you shed a light on how is the situation there? The media made it seem like nobody is surviving right over there. I hope you are safe.
    - climber_mac 10y ago
      I have actually been living in Canada for 4 years now. Everything is a very hairy mess; I was there in the summer of 2015 and remember thinking "Wow! Things can't get possibly worst than this", and then I went back unexpectedly late this year and I can't tell you how much worst things are looking. The infrastructure is collapsing, finding food to eat is a game of going to every supermarket in the city, among other things. I think my Dad puts it really well when he says that Venezuela has had a reversal of all the progress we made for decades; people have lost a lot of their values simply because life is so tough.
  - JumpCrisscross 10y ago
    > I'm from Venezuela, and happen to know a few people that are mining bitcoin down there Is there any evidence government cronies are mining Bitcoin en masse?
    - jimmywanger 10y ago
      > Is there any evidence government cronies are mining Bitcoin en masse? I'm not quite sure why people who have contacts in the government would need/want to run bitcoin. If you do have reliable contacts, the best way to make money (as I understand it) is from import/export fraud, as well as exchange rate trickery. Bitcoin seems like it's something you can do without government contacts.
- gus_massa 10y ago
  From https://en.wikipedia.org/wiki/Electricity_pricing https://en.wikipedia.org/wiki/Electricity_pricing > 3.1[US cents/kWh] at Official exchange rate ( 13.50 Bs/US$) or 0.48 [US cents/kWh] at unofficial exchange rate (1.095 Bs/US$) (This may have changed due to high inflation.) For comparison, in the same table the price in continental USA is between 8 and 17 [US cents/kWh]. They were exchanging it for money or stuff in Colombia, so they were getting an effective price similar to using the black market bolivar/US$ exchange rate, i.e. 0.48 [US cents/kWh]
  - v768 10y ago
    I updated Wikipedia. I live in Caracas and just had a look at my invoice.
- alphydan 10y ago
  Electricity is practically free, and I imagine they didn't move there to mine but rather were born in Venezuela.
- csomar 10y ago
  I suspect electricity is pegged to the official rate. This makes it heavily subsidized even if it isn't. (The spread between the official and black market rate is huge) So basically they are buying electricity at official rate and then selling the proceeds in the black market. Rinse and repeat. I suspect, also, their biggest challenge is to get the miners inside the country (since they are usually huge in size)
- deleted 10y ago
  [deleted]
kbart 10y ago
There was an interesting article few months back about Bitcoin mining in Venezuela[0]. TL;DR "Bitcoin mining is arguably the best possible use of electricity in Venezuela because it's providing the country with what it needs most—a relatively stable currency that retains its value across borders." http://reason.com/archives/2016/11/28/the-secret-dangerous-world-of http://reason.com/archives/2016/11/28/the-secret-dangerous-w...
- amenod 10y ago
  The article seems very anti-socialist: > ... making life tolerable—if not always easy—in the midst of a socialist hell. I have no idea how it is in Venezuela, but as a citizen of former socialist / now capitalist republic I take such articles with a grain of salt. One could also argue that they are basically stealing the (heavily subsidized) energy from other citizens of Venezuela. In capitalism such thing would be normal, but in socialism it is far from it.
  - nickik 10y ago
    No. In (idea) capitalism it would be normal for the energy to be sold and a price emerging from the supply and demand. They are not 'stealing' the energy 'from other citizens' they are using the energy that the bad repressive government of Venezuela provides. Its the governments prorogative to subsidize energy, and they have to deal with the consequences. I however agree that 'in the midst of a socialist hell' is not an apportierte way to write an article.
  - v768 10y ago
    At this point it's not about capitalism or socialism really, it's mostly years of terrible administration, creating money black holes.
  - ue_ 10y ago
    For a website billing itself as "reason.com", it seems very unreasonable to be saying that Venezuela, which suffered many economic problems and still does, without any worker control of the MoP, is "Socialist". The only reasonable thing about free markets is that they bring home the bacon from the exploitation of the proles. How wonderfully "free", to be forced to sell your labour and be treated as any other commodity.
deleted 10y ago
[deleted]
v768 10y ago
I live in Venezuela and just looked at my electricity invoice: In November I paid 0,00004 USD/kWh. The prices were raised in December: 0,00016 USD/kWh. If you prefer having your own generator, diesel fuel is 0,0000001 $/L. You can get 7356000 Liters for one dollar. So basically energy is free.
- giarc 10y ago
  Those diesel prices in USD?
  - ufo 10y ago
    I assume the prices are in Bolivars and that they haven't been reajusted by the government in a while, despite the hyperinflation.
    - thiagoharry 10y ago
      I know that in Venezuela fuel is extremely cheap. After all, they produce lots of petroleum and they follow the political decision to use some of this oil to drop the prices in the internal market, even when exportation prices would make them get more money selling all the oil to foreign countries.
      - nonbel 10y ago
        >"Venezuela: We have calculated the price of diesel using the 2012 benchmark results from the German Development Agency. Then, we updated the data with up-to-date currency values and information on the change in international petroleum prices. Based on these estimates, the price of diesel is 0 U.S. Dollar. For comparison, the average price of diesel in the world for this period is 0.91 U.S. Dollar. " http://www.globalpetrolprices.com/Venezuela/diesel_prices/ http://www.globalpetrolprices.com/Venezuela/diesel_prices/ Wow. Edit: It looks like the price is so low scripts are breaking all over the place: "The price of diesel in Venezuela is 0 EUR per liter which is 100% lower than the average world price." http://www.mytravelcost.com/Venezuela/gas-prices/ http://www.mytravelcost.com/Venezuela/gas-prices/ http://www.mytravelcost.com/Venezuela/gas-prices/ http://www.mytravelcost.com/Venezuela/gas-prices/
bookbinder 10y ago
> Venezuela has arrested a group of Bitcoin miners for allegedly “affecting stability” of the country’s electricity supply. I don't understand. Does Venezuela have some law that says people aren't allowed to use too much electricity for "X"? The article is a bit light on details. Thenagain, maybe this is just business as usual in a country on the verge of collapse.
- DavidHm 10y ago
  Whether or not there's a specific law for it is irrelevant, sadly. Government doesn't like it, therefore government shuts it down. If it wasn't for "affecting stability of electricity supply", it would probably be "affecting stability of the economy" or something else.
  - gozur88 10y ago
    Every government has laws that can be applied to pretty much any activity if interpreted broadly enough. What not every government has is a functioning court system that keeps them from getting interpreted that broadly.
- marcosdumay 10y ago
  Venezuela's government is already beyond that need of having laws before they arrest the people that broke them.
EekSnakePond 10y ago
Wow, HN. Now I know what filter bubble you're in. All of the comments in here are talking about some fabricated link between electricity and BitCoin when the reality is that Venezuela is aggressively and intentionally playing the hyperinflation game. BitCoins obviously threaten the redenomination event.
WhitneyLand 10y ago
There are good reasons for wanting to mine. The official currency is extremely devalued and essentially not trusted. Everyone wants us dollars, and bitcoin is better as well. And remember it's not just a matter of having money. Everything is rationed harshly, so you can't just go into a grocery store and fill up your cart everyday, even if you happen to have money which most people do not. The irony is that oil is effectively free. No food but plenty of oil. Most of the problems are the result of government leadership making bad decisions over a long period. If you're traveling down there for business ask what you can bring to donate. If you fill up all extra space in your luggage from the US it can be a godsend to bring diapers, and other stuff that is hard to get but desperately needed.
Wilduck 10y ago
It doesn't say it in the article, but they were actually stealing the power. Therefore it's non-news... just something that would happen in every in any country when the thieves get caught.

126 points by elmar 10y ago

Of all the places to mine Bitcoin, why Venezuela? Is the electricity subsidized enough to justify all the other headaches associates with running an operation out of there? With the instability of their currency I can understand why someone would want to use or buy bitcoin, but why mine there?

VMG 10y ago
> Is the electricity subsidized enough to justify all the other headaches associates with running an operation out of there? Yes, it is. Mining cost is overwhelmingly dictated by energy cost. And once you have a small farm running, it should be easy to scale up. Also consider the possibility that they were stealing the power (I think I read that somewhere).
- olegkikin 10y ago
  You also have to constantly update your mining equipment, because it becomes obsolete within months.
  - celticninja 10y ago
    Months is probably inaccurate mainly because new equipment is not released that often. You may need more equipment to maintain your share but not necessarily updated equipment. Further updated equipment usually helps alleviate the energy usage which in these cases is not as relevant.
    - Bartweiss 10y ago
      The miners I've known don't usually throw everything out. They expand or maintain with new gear when appropriate, and 'expire' the oldest stuff when space gets tight. You're right about the electricity point - replacement schedules are often dictated by power per watt, since improving that expands margins. If power is free or subsidized, hardware costs are a larger part of expenses and it becomes tempting to buy more older gear instead of less fancy stuff. (As an aside, miners are a great place to buy computer parts for that reason - I've known several unloading last year's GPUs dirt cheap. The hardware is run into the ground, but I've seen "if it craps out call me and I'll replace it" deals.)
      - celticninja 10y ago
        I cant imagine many people are still mining on GPUs, not since ASICs have become the norm and unfortunately a bitcoin mining ASIC is pretty useless outside of mining for bitcoins.
  - rtkwe 10y ago
    Isn't the main reason that they become 'obsolete' is because their cost to run (pretty much just electricity and per unit cost of the miners themselves) exceeds the expected pay out (their relative hash rate). So by running where electricity is much cheaper older machines that have been discarded can still make sense to run.
    - rudolf0 10y ago
      Really depends. CPU mining is like trying to mine a diamond with a toothpick and will only get worse. If your machine isn't above at least some threshold (unless you have a massive farm of them), you're really just wasting CPU cycles and heat.
      - rtkwe 10y ago
        Yeah it doesn't magically make _any_ mining technique profitable again but it does shift the math back towards slower/less efficient ASICs being viable to use instead of just being a waste of money. From the article it sounds like they're using 300 of the Antminer so they're not trying to run CPU or GPU mining not sure where it falls on the current profitability range, I'm not that deep into BTC.
  - deleted 10y ago
    [deleted]
hueving 10y ago
>With the instability of their currency I can understand why someone would want to use or buy bitcoin, but why mine there? I suspect you answered your own question. >the electricity subsidized enough to justify all the other headaches associates with running an operation out of there People tend to behave rationally so based on the other prospects, which there aren't many of in Venezuela, Bitcoin mining must have become a useful source of income.
- Bartweiss 10y ago
  Bitcoin mining is actually a pretty fantastic option - it enables buying subsidized power very cheap, and then generating wealth that's very easy to convert to hard foreign currencies. So it's cheaper to do there than in the US, and more rewarding once you do it.
climber_mac 10y ago
I'm from Venezuela, and happen to know a few people that are mining bitcoin down there. Electricity is incredibly cheap! You practically don't have to factor electricity costs in your operation. Yes, the grid is very unstable, but you can always by generators that run on gasoline (which is also incredibly cheap! a full tank of gas for your car will cost less than 0.1 USD.) Now, this is obviously horrible for the environment. But what can you expect when your own currency is being rapidly destroyed by the power-hungry idiots that have taken hold of the country. Let's hope for a brighter future.
- csomar 10y ago
  Can you shed a light on how is the situation there? The media made it seem like nobody is surviving right over there. I hope you are safe.
  - climber_mac 10y ago
    I have actually been living in Canada for 4 years now. Everything is a very hairy mess; I was there in the summer of 2015 and remember thinking "Wow! Things can't get possibly worst than this", and then I went back unexpectedly late this year and I can't tell you how much worst things are looking. The infrastructure is collapsing, finding food to eat is a game of going to every supermarket in the city, among other things. I think my Dad puts it really well when he says that Venezuela has had a reversal of all the progress we made for decades; people have lost a lot of their values simply because life is so tough.
- JumpCrisscross 10y ago
  > I'm from Venezuela, and happen to know a few people that are mining bitcoin down there Is there any evidence government cronies are mining Bitcoin en masse?
  - jimmywanger 10y ago
    > Is there any evidence government cronies are mining Bitcoin en masse? I'm not quite sure why people who have contacts in the government would need/want to run bitcoin. If you do have reliable contacts, the best way to make money (as I understand it) is from import/export fraud, as well as exchange rate trickery. Bitcoin seems like it's something you can do without government contacts.
gus_massa 10y ago
From https://en.wikipedia.org/wiki/Electricity_pricing https://en.wikipedia.org/wiki/Electricity_pricing > 3.1[US cents/kWh] at Official exchange rate ( 13.50 Bs/US$) or 0.48 [US cents/kWh] at unofficial exchange rate (1.095 Bs/US$) (This may have changed due to high inflation.) For comparison, in the same table the price in continental USA is between 8 and 17 [US cents/kWh]. They were exchanging it for money or stuff in Colombia, so they were getting an effective price similar to using the black market bolivar/US$ exchange rate, i.e. 0.48 [US cents/kWh]
- v768 10y ago
  I updated Wikipedia. I live in Caracas and just had a look at my invoice.
alphydan 10y ago
Electricity is practically free, and I imagine they didn't move there to mine but rather were born in Venezuela.
csomar 10y ago
I suspect electricity is pegged to the official rate. This makes it heavily subsidized even if it isn't. (The spread between the official and black market rate is huge) So basically they are buying electricity at official rate and then selling the proceeds in the black market. Rinse and repeat. I suspect, also, their biggest challenge is to get the miners inside the country (since they are usually huge in size)
deleted 10y ago
[deleted]

kbart 10y ago

There was an interesting article few months back about Bitcoin mining in Venezuela[0]. TL;DR "Bitcoin mining is arguably the best possible use of electricity in Venezuela because it's providing the country with what it needs most—a relatively stable currency that retains its value across borders." http://reason.com/archives/2016/11/28/the-secret-dangerous-world-of http://reason.com/archives/2016/11/28/the-secret-dangerous-w...

amenod 10y ago
The article seems very anti-socialist: > ... making life tolerable—if not always easy—in the midst of a socialist hell. I have no idea how it is in Venezuela, but as a citizen of former socialist / now capitalist republic I take such articles with a grain of salt. One could also argue that they are basically stealing the (heavily subsidized) energy from other citizens of Venezuela. In capitalism such thing would be normal, but in socialism it is far from it.
- nickik 10y ago
  No. In (idea) capitalism it would be normal for the energy to be sold and a price emerging from the supply and demand. They are not 'stealing' the energy 'from other citizens' they are using the energy that the bad repressive government of Venezuela provides. Its the governments prorogative to subsidize energy, and they have to deal with the consequences. I however agree that 'in the midst of a socialist hell' is not an apportierte way to write an article.
- v768 10y ago
  At this point it's not about capitalism or socialism really, it's mostly years of terrible administration, creating money black holes.
- ue_ 10y ago
  For a website billing itself as "reason.com", it seems very unreasonable to be saying that Venezuela, which suffered many economic problems and still does, without any worker control of the MoP, is "Socialist". The only reasonable thing about free markets is that they bring home the bacon from the exploitation of the proles. How wonderfully "free", to be forced to sell your labour and be treated as any other commodity.

deleted 10y ago

[deleted]

v768 10y ago

I live in Venezuela and just looked at my electricity invoice: In November I paid 0,00004 USD/kWh. The prices were raised in December: 0,00016 USD/kWh. If you prefer having your own generator, diesel fuel is 0,0000001 $/L. You can get 7356000 Liters for one dollar. So basically energy is free.

giarc 10y ago
Those diesel prices in USD?
- ufo 10y ago
  I assume the prices are in Bolivars and that they haven't been reajusted by the government in a while, despite the hyperinflation.
  - thiagoharry 10y ago
    I know that in Venezuela fuel is extremely cheap. After all, they produce lots of petroleum and they follow the political decision to use some of this oil to drop the prices in the internal market, even when exportation prices would make them get more money selling all the oil to foreign countries.
    - nonbel 10y ago
      >"Venezuela: We have calculated the price of diesel using the 2012 benchmark results from the German Development Agency. Then, we updated the data with up-to-date currency values and information on the change in international petroleum prices. Based on these estimates, the price of diesel is 0 U.S. Dollar. For comparison, the average price of diesel in the world for this period is 0.91 U.S. Dollar. " http://www.globalpetrolprices.com/Venezuela/diesel_prices/ http://www.globalpetrolprices.com/Venezuela/diesel_prices/ Wow. Edit: It looks like the price is so low scripts are breaking all over the place: "The price of diesel in Venezuela is 0 EUR per liter which is 100% lower than the average world price." http://www.mytravelcost.com/Venezuela/gas-prices/ http://www.mytravelcost.com/Venezuela/gas-prices/ http://www.mytravelcost.com/Venezuela/gas-prices/ http://www.mytravelcost.com/Venezuela/gas-prices/

bookbinder 10y ago

> Venezuela has arrested a group of Bitcoin miners for allegedly “affecting stability” of the country’s electricity supply. I don't understand. Does Venezuela have some law that says people aren't allowed to use too much electricity for "X"? The article is a bit light on details. Thenagain, maybe this is just business as usual in a country on the verge of collapse.

DavidHm 10y ago
Whether or not there's a specific law for it is irrelevant, sadly. Government doesn't like it, therefore government shuts it down. If it wasn't for "affecting stability of electricity supply", it would probably be "affecting stability of the economy" or something else.
- gozur88 10y ago
  Every government has laws that can be applied to pretty much any activity if interpreted broadly enough. What not every government has is a functioning court system that keeps them from getting interpreted that broadly.
marcosdumay 10y ago
Venezuela's government is already beyond that need of having laws before they arrest the people that broke them.

EekSnakePond 10y ago

Wow, HN. Now I know what filter bubble you're in. All of the comments in here are talking about some fabricated link between electricity and BitCoin when the reality is that Venezuela is aggressively and intentionally playing the hyperinflation game. BitCoins obviously threaten the redenomination event.

WhitneyLand 10y ago

There are good reasons for wanting to mine. The official currency is extremely devalued and essentially not trusted. Everyone wants us dollars, and bitcoin is better as well. And remember it's not just a matter of having money. Everything is rationed harshly, so you can't just go into a grocery store and fill up your cart everyday, even if you happen to have money which most people do not. The irony is that oil is effectively free. No food but plenty of oil. Most of the problems are the result of government leadership making bad decisions over a long period. If you're traveling down there for business ask what you can bring to donate. If you fill up all extra space in your luggage from the US it can be a godsend to bring diapers, and other stuff that is hard to get but desperately needed.

Wilduck 10y ago

It doesn't say it in the article, but they were actually stealing the power. Therefore it's non-news... just something that would happen in every in any country when the thieves get caught.