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Venezuela Legalizes Bitcoin Mining (09/21/2020 - Official Gazette of the Republic #41,969 )

Venezuela Legalizes Bitcoin Mining (09/21/2020 - Official Gazette of the Republic #41,969 )

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Since 2017, in Venezuela there have been arrests of people and seizures of Bitcoin mining equipment, cataloging this activity as "illegal" but without the existence of a regulatory framework where mining is classified as a criminal act. In this way, human rights have been violated, equipment seized, private properties raided where those affected have been legally charged and are serving sentences in Venezuelan prisons.But why would Bitcoin mining be considered an illegal act?

On June 9 of this year, police in Makhachkala, Russia, detained a 30-year-old man who operated a BTC mining farm, accusing him of being responsible for economic damage to the state power grid worth more than 34 million rubles ($ 494,000).

In China, electricity generation comes mostly from thermoelectric sources, which involves the burning of large amounts of hydrocarbons and the production of tons of toxic waste and greenhouse gases that contribute to global overheating.

The electrical consumption of the mining farms in China, triggered the alarms of the authorities who undertook a fierce search and penalization for those who were carrying out these activities.

Between 2017 - 2018 the government of this country banned ICOs and exchanges, but by mid-2019 China legalized the use of cryptocurrencies and promoted the launch of its own digital cryptocurrency.

As we can see, the main reason for the prohibition of digital mining activity is the high consumption of electrical energy, although the possession and commercialization of BTC is also associated with international organized crime, drug trafficking and terrorism, due to its anonymity.

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BTC mining in Venezuela

In my country, Venezuela, the authorities do not have a clear idea, attached to the reality of what cryptocurrency mining is. What is clear is that it generates a large profit margin. It is digital money with which dollars can be easily acquired and placed abroad without the government receiving a penny of all this great capital.

We must consider the fact that in Venezuela electricity is very cheap. Although in the last five years the energy generating infrastructure in the country has been presenting a significant debacle, even the mining activity of BTC in Venezuela represents a tempting option for those who can acquire expensive equipment, since clandestine electricity connections are very common. and the authorities do not have the resources, a qualified human team or technical equipment to detect them.

In 2017, the Venezuelan authorities dismantled a facility with 11,000 BTC mining equipment. As a result of the procedure, two Venezuelan citizens were detained, who were accused of belonging to a criminal network based in Poland, dedicated to laundering money, committing computer crimes, financing terrorism and stealing electricity.
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There are many testimonies from affected people who have had mining equipment seized, who report being the object of extortion by police authorities.

Once the authorities (police and detectives) identify any owner of mining equipment, they threaten them and demand money in exchange for their freedom.

So mining in Venezuela is a risky activity due to many factors.

Government Regulations

The "National Constituent Assembly" (A kind of parallel congress imposed by the dictatorial government of Venezuela) issued the Constituent Decree dated November 20, 2018, on the Comprehensive Crypto-Assets System, published in the Official Gazette of the Bolivarian Republic of Venezuela N ° 41,575 dated January 30, 2019.

With this decree, the government seeks to create and define the regulatory framework applicable to the Comprehensive Cryptoassets System, with the creation of SUNACRIP (National Superintendence of Cryptoassets and Related Activities).

You can get more information in my previous article:

Venezuela, South American Leader in Cryptoassets Legislation.

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Government Surprise

Again, Venezuelan authorities would be "Legalizing" Bitcoin mining in Venezuela, by decree published on September 21 in the Official Gazette of the Republic, under file number 41,969.

The purpose of this new law is to regulate activities related to the use, importation, commercialization of equipment, parts and pieces for digital mining; in the same way, it covers the equipment and conditioning of spaces dedicated to offering accommodation for equipment; among other scopes.
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Creation of a Pool of Miners

The creation of this Pool supposes the grouping of the people who develop digital mining activities in order to join forces and facilitate the achievement of the goals.

But, as the repressive character of dictatorial communist governments is well known, this property is accompanied by threats:

Article 19 of the document that mentions the miners that are not connected to the national mining pool; They will be subject to the measures of infractions and sanctions provided in the Constituent Decree on the Comprehensive Cryptoactive System; mentioned in Chapter V of the Constituent Decree; which stipulates fines of up to three hundred sovereign crypto assets and up to five years of pressure.
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Conclusion

The fact that a government constantly establishes and updates the legal framework for the regulation of activities related to crypto-finance, should be interpreted as a positive aspect, since if the nations of the world turn to crypto, then it would be promoting the, so far utopian, mass adoption that we all long for.

The universalization of cryptocurrencies and crypto-finance would be much closer to achieving.

It seems very contradictory that in a country like Venezuela, where the authorities do not protect the personal guarantees of property and finances, and where every day human rights are violated by government representatives, it is intended to establish legislation that attributes a legal character to it. to cryptocurrency mining. Especially because in recent years, the persecution of this activity has often become repressive and where those affected (miners) turned out to be victims of extortion and theft of their property.

In my very personal opinion, what this new decree of the Venezuelan government seeks is to further extend the controls over the miners.

Initially, "taxes" would be applied to the profits obtained, but with the creation of the Unique Registry of Miners, there would be a list with personal and financial data of the people who want to carry out this economic activity.

Anyone with access to this personal information could access the miners' family residence site, information about their bank accounts and crypto wallets, and thus select who would be the next victims of kidnapping, extortion and physical disappearance. All this protected by the state security forces.