VENEZUELA — PROHIBITION DESPITE COLOSSAL POTENTIAL

Diagnosis of the Old Model and Its Place in the New Energy-Digital System

INTRODUCTION: BRIEF DIAGNOSIS

Venezuela is the most dramatic example of how a country with colossal energy potential can lose it. It is a state that simultaneously is:

• The owner of the second-largest hydropower complex in the world — the Guri Dam (10.2 GW) retains the capacity to provide up to 75% of the country’s energy [6][13].
• A country with a historic peak in electricity consumption — 15,579 MW in 2026, the highest level in a decade [4][6].
• A territory with a complete mining ban — since May 2026, cryptocurrency mining has been prohibited throughout the country [3].
• A state that dismantled the largest mining farm — in Aragua, 4,000 ASIC miners with a capacity of 8–10 MW were destroyed [2][11].

The paradox of Venezuela: a country that could become one of the world’s largest mining hubs has banned mining. A country that could monetize surplus energy through Bitcoin is destroying mining farms. A country where citizens massively use USDT to protect themselves from inflation is rejecting cryptocurrencies [5][8].

Venezuela is not building a new system. It is trying to preserve the old one — through bans, repression, and control. And this makes it the most illustrative example of how politics can defeat physics.

SECTION 1. THE OLD MODEL: WHAT EXISTED, WHAT BROKE

Venezuela’s economic model over recent decades was built on three pillars:

• Oil — the world’s largest proven reserves (around 300 billion barrels).
• Hydropower — the Guri Dam (10.2 GW), the second-largest complex in the world [6][13].
• State control — nationalization of the oil industry (PDVSA), centralized management of the economy.

This model has collapsed.

The oil industry is in ruins. PDVSA, once one of the world’s largest oil companies, has deteriorated. U.S. sanctions, corruption, and lack of investment have destroyed the industry.

The power system is on the verge of collapse. The system operates with a generation deficit of around 2,500 MW [6]. The Guri Dam retains the capacity to provide up to 75% of the country’s energy, but the infrastructure is operating “at full capacity” under “critical conditions” [6][13]. 35% of households experience power outages every day [4]. Demand has reached a historic peak (15,579 MW), but the system cannot cope [4][6].

Hyperinflation has destroyed savings. The money supply has grown by 131% since the beginning of 2026 [5]. Citizens are fleeing from the bolívar to USDT — trading volume on Binance P2P has increased by 16% over 30 days [8]. But the state prohibits mining [3].

The map (oil, hydropower, state control) no longer reflects the territory (destroyed infrastructure, outages, hyperinflation).

SECTION 2. ENERGY PROFILE: WHAT EXISTS, WHAT IS MISSING

Venezuela is a country with colossal energy potential that it cannot utilize.

What exists	What is missing
Guri Dam — 10.2 GW (second-largest in the world) [6][13]	Flexible grid infrastructure
36,000 MW of nominal capacity [6]	Efficient distribution
Surplus generation	A stable power system [6]
Oil reserves (the largest in the world)	Investment in modernization

Key fact: Venezuela has a colossal energy surplus. But this surplus does not reach consumers because of a bottleneck in the transmission network. The system operates with a 2,500 MW deficit despite a nominal capacity of 36,000 MW [6].

Comparison with Paraguay: Paraguay has a surplus of 3,480 MW and monetizes it through mining, ranking 4th in the world by hashrate [1][10]. Venezuela has greater potential but prohibits mining [3].

Conclusion: Venezuela could become one of the world’s largest mining hubs. It has surplus energy that would otherwise go to waste. But the state prohibits mining instead of monetizing it [3].

SECTION 3. POSITION ON MINING AND CRYPTOCURRENCIES

This is the main contradiction in Venezuela.

Actual situation: mining has been prohibited throughout the country since May 2026 [3].

The ban:

• Energy Minister Rolando Alaca confirmed an “absolute ban” on mining [3].
• The reason is the “impact on the power system” and the “historic peak in demand” [3].
• Violators will be “punished to the full extent of the law” [3].
• In Carabobo State, rewards of up to $1,000 have been introduced for reports about underground mining farms [2].

Dismantling of the Aragua farm:

• In May 2026, a mining farm with 4,000 ASIC miners was destroyed in Maracay [2][11].
• Capacity: 8–10 MW (equivalent to the consumption of 2,000 households) [2].
• Equipment: Whatsminer M30S (MicroBT) [2].
• Operation “Cazador” — a joint operation involving CICPC, the military, and police [2].

But Venezuela is the second-largest crypto-adoption market in Latin America:

• $44.6 billion in retail transaction volume in 2025 [9].
• 17th place in the world by transaction volume [9].
• USDT accounts for ~90% of active P2P listings on Binance for Venezuelan pairs [8].
• Citizens use USDT for salaries, transfers, payments to suppliers, and cross-border purchases [5][8].

The paradox of Venezuela: the state prohibits mining for citizens but uses crypto to circumvent sanctions [7]. It dismantled a farm with 4,000 miners but could monetize the wasted energy [2][6]. It prohibits what citizens use every day [5][8].

SECTION 4. POSITION OF THE CENTRAL BANK (BCV)

The Central Bank of Venezuela is one of the weakest and most dependent central banks in the world.

Instruments:

• Interest rate — ineffective because of hyperinflation.
• Foreign-exchange interventions — limited by sanctions.
• The money supply has grown by 131% since the beginning of 2026 [5].

Position on cryptocurrencies:

• Petro — a state token pegged to oil. It failed because of investor distrust and U.S. sanctions [7].
• USDT — the BCV purchased USDT to circumvent sanctions [7].
• Mining ban — confirmed in May 2026 [3].

The BCV paradox: it prohibits citizens from mining but uses crypto itself to circumvent sanctions [7]. It created Petro but cannot sell it [7]. It fights crypto but depends on it for survival [7].

SECTION 5. ARCHITECTURAL CONCLUSION: WHAT PATH IS AVAILABLE TO VENEZUELA

Venezuela is the only country that simultaneously:

• Possesses colossal energy potential (10.2 GW from Guri, a 2,500 MW deficit with 36,000 MW of nominal capacity) [6].
• Prohibits mining throughout the country [3].
• Dismantled the largest mining farm (4,000 ASICs) [2][11].
• Is the second-largest crypto-adoption market in Latin America ($44.6 billion) [9].
• Uses crypto to circumvent sanctions [7].

Unlike Paraguay, Venezuela has a larger energy surplus but prohibits mining. Paraguay ranks 4th by hashrate [1][10], while Venezuela destroys mining farms [2][11].

Unlike Iran, Venezuela has not legalized mining as an industry. Iran is building a Bitcoin economy for survival. Venezuela prohibits it [3].

Unlike Russia, Venezuela has no strategy. Russia at least recognizes mining as a way to monetize energy. Venezuela does not [3].

Weaknesses of Venezuela:

• Mining ban despite colossal potential. Energy that could generate billions of dollars is being lost [3][6].
• Destroyed infrastructure. A 2,500 MW deficit, with outages lasting 6–7 hours per day [4][6].
• Hyperinflation. The money supply has grown by 131% since the beginning of 2026 [5].
• Sanctions. They restrict access to the global financial system [7].
• Lack of strategy. There is no unified plan — only bans and repression [3].

Main conclusion:

Venezuela will not “import Bitcoin,” like Europe. It has its own energy. But it will not “mine Bitcoin” either — it prohibits mining [3]. It will lose energy — megawatts that could become global liquidity [6].

For Venezuela, Bitcoin is neither an “energy coupon” nor a “survival tool.” It is a missed opportunity — a resource that the state prohibits from being used [3][6].

CONCLUSION: HOW VENEZUELA FITS INTO THE GLOBAL TRANSITION

Venezuela is neither an architect of the new system nor its victim. Venezuela is an anti-example.

• Europe will become a permanent importer of Bitcoin — because it has no energy.
• China is building parallel infrastructure — because it has a strategy.
• The United States is trying to maintain dominance through a Bitcoin reserve — because the dollar no longer works.
• Russia could become an energy sovereign — if it finds a strategy.
• Venezuela prohibits. It has colossal energy potential but destroys mining farms [2][11]. It created Petro but did not legalize Bitcoin [7]. It uses crypto to circumvent sanctions but prohibits it for its citizens [3][7].

Global meaning: Venezuela shows that even a country with colossal energy potential can lose it if politics defeats physics. The question is not whether Venezuela will use Bitcoin. The question is whether it will be able to recognize its mistakes — or remain a country that prohibits what could save it.

SOURCES

[1] Gate.com. 美国比特币挖矿份额下降 0.823%，俄罗斯和中国迎头赶上. 2026-08-27. https://www.gateweb3.net/zh/news/detail/us-bitcoin-mining-share-drops-0823-as-russia-and-china-gain-ground-23787773

[2] Agencia Venezolana de Noticias. Desmantelado en Aragua centro ilegal de minería de criptoactivos con 4.000 equipos. 2026-05-18. https://avn.info.ve/desmantelado-en-aragua-centro-ilegal-de-mineria-de-criptoactivos-con-4-000-equipos/

[3] Venezolana de Televisión. Minería digital está prohibida en Venezuela. 2026-05-07. https://vtv.com.ve/mineria-digital-esta-prohibida-en-venezuela/

[4] Xinhua Español. Venezolanos enfrentan cortes eléctricos por fenómenos naturales y sanciones de EEUU. 2026-08-26. http://spanish.xinhuanet.com/20260827/a7bb7dffaff2474fa3fdd5696ea7fb5d/c.html

[5] Banca y Negocios. En Venezuela hay una alta adopción de criptomonedas, pero una baja integración financiera del sector. 2026-08-31. https://www.bancaynegocios.com/en-venezuela-hay-una-alta-adopcion-de-criptomonedas-pero-una-baja-integracion-financiera-del-sector/

[6] Finanzas Digital. Sistema eléctrico opera al límite con un déficit que ronda los 2.500 MW. 2026-08-04. https://finanzasdigital.com/deficit-del-sistema-electrico-venezolano-fallas-guri/

[7] Taylor & Francis Online. The political economy of cryptocurrency in Latin America. 2026-07-29. https://www.tandfonline.com/doi/full/10.1080/03085147.2026.2683279

[8] CoinMarketCap. Venezuelans Flood Binance For USDT As Local Currency Weakens. 2026-06-16. https://coinmarketcap.com/community/articles/6a327ab1e471ac725ae1bd01/

[9] Chainalysis. 2025 LATAM Crypto Adoption: Latin America Emerges as Crypto Powerhouse. 2025-10-01. https://www.chainalysis.com/blog/latin-america-crypto-adoption-2025/

[10] Gate.com. 美國比特幣挖礦占比下降 0.823%，俄羅斯與中國迎頭趕上. 2026-08-27. https://web.gate.it/zh-tw/news/detail/us-bitcoin-mining-share-drops-0823-as-russia-and-china-gain-ground-23787773

[11] Edgen. 委内瑞拉在能源危机期间没收4000台比特币矿机. 2026-05-23. https://www.edgen.tech/zh/news/post/venezuela-seizes-4000-bitcoin-miners-amid-energy-crisis

[12] Venezolana de Televisión. Venezuela consolida su posición como segundo país con más adopción cripto. 2026-05-20. https://vtv.com.ve/venezuela-segundo-pais-adopcion-cripto/

[13] Vietnam.vn. Venezuela menyerukan penghematan listrik dan air di tengah risiko kekeringan. 2026-08-13. https://www.vietnam.vn/id/venezuela-keu-hemat-listrik-dan-air-di-tengah-risiko-kekeringan

[14] CoinMarketCap. Colombian President Says Clean-Energy Bitcoin Mining Could Draw Investment to Venezuela. 2026-05-09. https://coinmarketcap.com/community/articles/69face5b44029f1566ce665a/