In a troubled economy, more and more Venezuelans are turning to Bitcoin mining despite risk of arrest by police for theft of electricity. The country’s economy was booming, but many middle class families such as Brito’s chose to leave the country because of widespread nationalizations of private enterprises. Brito moved to Spain with his family and became a web developer. In 2011, he discovered Bitcoin, bitcoin mining modules for basic nursing instantly realized the potential of making money by mining bitcoin.
Bitcoin mining is a process where computational power is used to solve a mathematical puzzle while creating a Bitcoin block, with the winner getting a reward of 12. 5 bitcoins for each block that they create. When he started mining in 2011, the reward for each block was 50 bitcoins. Brito made some profits by mining, but more than money, he was interested in the technology behind bitcoin, and in sharing this technology with others.
So he started the website bitcoinvenezuela. It serves as a hub for the Venezuelan Bitcoin miners, where they share their stories and experiences. Today, the country is witnessing runaway inflation as high as 1,600 percent per year. People have to wait in long lines for basic goods in government-run grocery stores. Even hospitals have been forced to work with inadequate equipment.
People have been hit from all sides in this economy, so it is unsurprising that they are protesting en masse. Venezuela is a socialist economy, where the government keeps a lot of control on economy and monetary policy. If anyone wants to buy foreign exchange in Venezuela, they have to buy it at government approved rates, which are prohibitively expensive. Which is where Bitcoin comes into the picture. Since Bitcoin can be used internationally, a lot of Venezuelans are using Bitcoin to buy foreign as well as local goods. Many companies are offering their services in lieu of Bitcoin only. Bitcoin mining can be used to earn bitcoins, which can then be used to buy goods in an economy where the local currency is rapidly losing purchasing power.