High energy consumption forces Venezuela to disconnect cryptocurrency mining farms

The Venezuelan Ministry of Electric Energy announced a plan to disconnect all cryptocurrency mining farms that power the National Electric System (SEN).

The announcement, which concerns all miners working with National Electricity, was shared publicly on the ministry's official Instagram page.

How will the plan affect the cryptocurrency mining industry in Venezuela?

The Venezuelan National Electricity Company (Corpoelec) and the Ministry of Public Affairs (MP) support the plan. The country's authorities have called for restrictions on energy supplies to cryptocurrency mining farms, including Bitcoin ones.

The government says the action is due to concerns about the stability of the national electricity system. In addition, it aims to put an end to “free” electricity consumption by miners.

Local media reported that Rafael Lacava, governor of Carabobo state, stressed the urgency of the restriction. Together with the Minister of Electric Energy, Jorge Márquez, Lacava called for limiting the activity of these data centers.

LaCava said : “If you, neighbor, see a house you know, tell that person to turn off the farm, or report it, because when they cut off the power to give someone electricity so they can make money, you find yourself without electrical service. .”

The Venezuelan government justifies the separation of cryptocurrency mining farms by the high electricity consumption required by these installations. The government claimed it also caused frequent power outages in surrounding areas. In addition, the government reaffirms its intention to prohibit clandestine mining of cryptocurrencies.

“(This separation) will avoid a significant impact on demand, allowing us to continue providing efficient and reliable service to all the Venezuelan people,” the Ministry of Electric Energy said.

However, it remains to be seen whether cryptocurrency miners operating without the national power system will be able to continue, as they have also faced restrictions. In March 2023, Venezuelan regulators ordered a halt to cryptocurrency mining after launching an investigation into a major corruption scheme.

This scheme allegedly involved the use of crypto wallets to transfer payments owed to state-owned oil company Petróleos de Venezuela SA (PDSVA). Meanwhile, several members of Venezuela's cryptocurrency watchdog, the National Authority for Supervision of Activities and Activities of Conexas (SUNACRIP), have been arrested on corruption charges.