Venezuela shuts down crypto mining farms amid soaring energy consumption

Venezuela’s Ministry of Electric Power has revealed plans to disconnect all cryptocurrency mining farms connected to the National Electric System. This significant decision impacts every miner that relies on national electricity. The announcement was made via the ministry’s official Instagram page.

Venezuela Bans Crypto Mining.

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The Venezuelan government has officially joined the growing list of countries expressing disapproval towards cryptocurrency mining, primarily due to the high electricity consumption associated with the process. Cryptocurrency mining, especially… pic.twitter.com/iFgaIH1rSX

— BitBase (@BitBaseCapital) May 19, 2024

Both the National Electric Corporation and the Public Ministry supported this initiative. Authorities call for limitations on the power supplied to crypto mining farms, including those mining Bitcoin.

The government insists that this measure stems from worries about the stability of the national electric grid and seeks to halt the miners’ free electricity usage.

Venezuela cracks down on crypto mining

Local media have highlighted statements from Rafael Lacava, the governor of Carabobo state, who stressed the critical need for these measures. Joined by the Minister of Electrical Energy, Jorge Márquez, Lacava urged a significant decrease in the operations of these data centers.

Governor Rafael Lacava encouraged residents to be vigilant and report any suspicious activity related to crypto mining. He stressed that allowing one person to profit from mining should not come at the expense of leaving others without electricity.

The Venezuelan government has cited crypto mining farms’ massive energy consumption as the main reason for their disconnection. According to officials, these facilities have strained the power grid and have been linked to frequent power outages in nearby communities.

Furthermore, the government emphasized its commitment to eliminating underground cryptocurrency mining operations. According to the Ministry of Electric Power, this disconnection aims to reduce the extreme demand on the power grid, ensuring they can maintain an efficient and dependable service for all Venezuelans.

Whether crypto miners operating off the national grid can still function remains uncertain, given that they’ve also encountered limitations. In March 2023, Venezuelan authorities halted crypto mining while probing a significant corruption scandal.

The scheme allegedly redirected payments using cryptocurrency wallets for the state-owned oil company, Petróleos de Venezuela SA. Meanwhile, several National Superintendence of Cryptocurrencies employees, the regulatory body, were arrested for corruption.

Read More: Proposed laws in Arkansas seek to govern Bitcoin mining operations

Biden bans Chinese crypto firm near base

In other news, President Joe Biden has shut down a Chinese cryptocurrency mining company and banned the firm from buying land near a Wyoming missile base. Biden stated that the site’s proximity to a nuclear missile base is a major security risk.

MineOne Partners Ltd., a crypto mining center near the Francis E. Warren Air Force Base, has received partial funding from Chinese nationals. As mentioned in the recent directive, this facility’s use of sophisticated mining technology brought in from abroad has raised national security issues.

🇺🇸🇨🇳 WHITE HOUSE ORDERS CHINESE FIRM TO SELL LAND NEAR AIR FORCE BASE

The White House gave a Chinese-linked firm 120 days to sell property near Francis E. Warren Air Force Base in Wyoming, citing spying fears.

MineOne Partners bought the land for crypto mining in June 2022.… pic.twitter.com/PKP4Urnehc

— Mario Nawfal (@MarioNawfal) May 13, 2024

According to Biden’s order, there are concerns that foreign-made equipment might be used for surveillance or espionage. As a result, the company must sell the property within 120 days and remove all machinery and structures from the premises within 90 days.

MineOne bought property in Cheyenne in June 2022 and converted it for cryptocurrency mining. However, it wasn’t until a public tip-off that the Committee on Foreign Investment in the United States discovered the acquisition hadn’t been reported as required.

As the chairperson of CFIUS, Treasury Secretary Janet Yellen highlighted the committee’s critical role in protecting national security. She detailed that the agency’s primary function is ensuring foreign investments do not threaten national security. Special emphasis is placed on transactions involving U.S. military installations and those incorporating special technology and equipment.

Since China banned cryptocurrency mining in 2021, many Chinese-owned mining operations have surged in the U.S. Attracted by the relatively low electricity costs and a stable legal environment, Chinese entrepreneurs continue investing heavily in the American crypto mining industry. Although some mining activities have resumed in China, the allure of the U.S. remains strong.

Recently, U.S. officials have focused more on Chinese-owned crypto mining companies. Earlier this month, Arkansas’s Republican governor, Sarah Huckabee Sanders, signed two laws to limit foreign ownership of crypto mining businesses in the state. The crackdown on MineOne is the second big move in this effort.

Under these rules, foreigners from countries like China, Iran, and Cuba can’t own crypto mines. These limits are part of the guidelines set by the State Department in the International Traffic in Arms Regulations.

Interestingly, Arkansas has recently become a center for Bitcoin mining. Last October, it was revealed that at least three mining operations in Arkansas were run by Chinese investors linked to their government. A former employee said there were plans to check out over 200 possible mining locations across 10 states.

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