Venezuelan Cryptocurrency Miner: “Police Hunt Us Like Dangerous Criminals”

Day after day, Alberto spends his time in rooms filled with equipment for mining Bitcoin, Ethereum, Litecoin, and Dash. He is 30 years old and has been mining cryptocurrency for the past six years. This work allows him to live comfortably, but it requires him to keep a low profile. As the industry has grown, he now manages 600 mining farms scattered across various cities in Venezuela, hidden in garages, private homes, and apartments.

According to Alberto, cryptocurrency mining in Venezuela has become a risky business, even though it is not officially banned. He notes that he has already had visits from police officers who come asking for information about the equipment, insist on meeting the owner, and demand bribes to avoid confiscating the hardware.

The last two visits happened just a few weeks ago, and similar incidents have been reported in other cities like Maracaibo, Valencia, Margarita, and Maracay. Alberto admits that living this way makes him feel like an underground operator with no certainty about the future.

“I’m fully immersed in this business and see how my work has become a target for extortion. We’re not talking about criminals in the usual sense, but about police officers,” Alberto said in an interview with CriptoNoticias. (His name has been changed for anonymity.)

He also says that visits from law enforcement are becoming more frequent. In the past month alone, he has spoken with several agents who asked for documents, certificates, and invoices.

“Recently, there were two inspections on different days. One investigator demanded to see a Central Bank license—a document that simply doesn’t exist for cryptocurrencies. They also asked for invoices for imported computers, the lease agreement, and a permit from the Main Directorate. We showed them, but they didn’t want to leave until we made a few phone calls. You could say we got lucky.”

Mining Farms Across Venezuela

The farms Alberto manages are spread throughout Venezuela, equipped for mining Bitcoin, Ethereum, Litecoin, and Dash.

Alberto’s experience has also been acknowledged by the Main Directorate for Cryptocurrency. In January 2018, Carlos Vargas, then head of the Directorate, admitted on a TV program that some government officials in Venezuela were involved in illegal extortion and confiscation of cryptocurrency mining equipment.

On January 8, 2018, on Venezolana de Televisión, Vargas said: “It’s true, there have been seizures that we at the Directorate consider illegal. It’s true, there has been abuse by dishonest officials who have used or continue to use extortion in this sector for personal gain.” He added, “We plan to return the equipment; they are required to return it because it shouldn’t be hidden away, benefiting unknown parties.”

Vargas’s words confirm that incidents like Alberto’s have happened before. However, ten months have passed since attention was drawn to these abuses, and the situation remains unchanged, despite petitions to the Ministry of Internal Affairs and state security agencies demanding an end to equipment seizures.

Equipment Losses

Alberto explained that this has been going on for a long time, and in 2017 he had to deal with similar situations, though the outcome was less favorable than a few weeks ago.

“A year ago, things were different. A commission raided another of our locations and broke in. At that time, crypto was a hot topic, so none of the miners dared to show up. Since no one came, they cut the bars and broke down the door. They did whatever they wanted. They took 50 Ethereum mining rigs, each worth about $2,000. In total, we lost around $100,000. Some other things disappeared too—it was basically a real theft. To avoid getting caught again, we had to move the equipment to a safer place.”

“I also know of cases where other farm owners have no choice but to cooperate with them to minimize losses. Sometimes they extort $5,000—it just depends on your luck,” the programmer says.

International media have also reported on the risks associated with mining in Venezuela, bringing more attention to the issue. Alberto notes, “Police show up suddenly and start pressuring you, saying they’ll arrest you, take you to the prosecutor, that you’re a criminal. The pressure is intense, but we already know how far they’re willing to go. And they won’t stop until they shut us down. These cases are becoming more frequent. I don’t know the reason—maybe it’s related to upcoming changes in the law, after which they won’t be able to bother us anymore.”

Since April, with the adoption of the law on crypto-assets and the petro cryptocurrency, the Venezuelan government has allowed cryptocurrency trading for goods and services. The law also allows for the creation of a Registry System for miners, virtual currency exchange points, and other regulatory bodies for intermediary activities and cryptocurrency holdings. In other words, the government itself encourages virtual currency exchange and invites miners to register. Nevertheless, for Alberto, the situation is only getting more dangerous.

“In reality, the police hunt us like the most dangerous criminals because we generate dollars. We’re not criminals, we’re not armed, and we’re not used to dealing with the police. They think that a little pressure is enough to take our money, since, in theory, things won’t escalate to violence. Given everything that’s happening, we live in the shadows, and that’s the price we pay for using the cheapest electricity in the world.”

Connected to the Power Grid

A month ago, Venezuela’s Minister of Internal Affairs, Néstor Reverol, announced that electricity consumption would be monitored in Zulia state due to ongoing power outages. Reverol said, “We are going to start monitoring those who mine cryptocurrency, whether individuals or companies, to assess electricity consumption, regardless of whether they have a permit from the Main Directorate or not.”

Miners, including Alberto, know firsthand that mining consumes a lot of electricity. However, he believes it’s wrong to blame miners for all the problems.

“We did the math and considered installing generators, but the numbers just don’t add up. We’re all connected to the grid. I won’t deny that farms use a lot of electricity, that’s true, but we’re willing to pay a bit more, even in dollars, as long as the price matches the risks. In Venezuela, for example, we can’t even come close to paying what people pay for electricity in the U.S., where the laws are clear and there’s full legal security.”

He agrees that the equipment uses a lot of electricity, but they’re always ready to pay, even in dollars, as long as the price is reasonable given the risks.

“Some government ministers blame us for the power outages in the energy system. This contradicts what they said about encouraging mining and investment in the country. They even say that petro can be mined. There’s a national cryptocurrency, it can be mined, and yet we’re blamed for damaging the power grid?”

Given all this, Alberto emphasizes that even though cryptocurrency mining is legal in Venezuela, he often feels persecuted as if he were committing a crime. He has sent a message to other miners, saying he hopes to continue working with crypto-assets in the future.

“Mining is legal and approved by the government; it’s a job that should be done without feeling like a criminal or a drug dealer. What bothers me most is that they say one thing and do another. The government itself forces us to stay in the shadows.”

“To other miners, I say: work carefully and only with trusted people. Never tell anyone what you do, and especially not where your equipment is located. The situation is complicated and confusing. I’m one of those who doesn’t want trouble, especially with the authorities.”

“It’s a job like any other—sometimes you win, sometimes you lose. We’re not drug dealers, we don’t have hens that lay golden eggs, we’re just people who want to live and work without harming anyone. I just hope we can keep doing that.”