Venezuelan citizens have begun to turn to Bitcoin as the continuing hyperinflationary crisis in their country has destroyed the value of cash. Both ordinary citizens and the government are facing a lack of foreign exchange. The deterioration of the bolivar has made it impossible to use as a currency, so the government is trying to accumulate US dollars in order to pay for imports of food and medicine from abroad. Citizens also would prefer to use the dollar, but given the Venezuelan government’s capital controls and unrealistic exchange rates, they have to find alternatives. And that’s where Bitcoin comes in.
Not only does Bitcoin serve as an alternative currency to the devalued bolivar, but it is also easy for Venezuelans to mine. Bitcoin mining requires significant amounts of computing power to run the Bitcoin program, with most miners preferring to use video cards since the power of video card GPUs exceeds that of computer CPUs. Running those cards requires a huge amount of electricity which, thanks to the Venezuelan government’s generous subsidization of electricity, is available nearly free to Venezuelan citizens, as long as they’re not subject to blackouts.
That free electricity won’t last forever, however, but in the meantime, Venezuelans are able to take advantage of Bitcoin mining to make enough money to buy medicine and supplies from overseas that they otherwise would have to do without. If there were ever an example to show the dangerous effects of government control over currency, and the need for alternatives to break that control, Venezuela is it.