Wednesday, August 14, 2019

Know the factors that affect the cryptocurrency mining business in Venezuela

At first glance, Venezuela appears to be a paradise for cryptocurrency mining, due to its low electricity rates. However, those who have dedicated themselves to this activity in the South American country agree that there are several factors that can influence their level of profitability. Experienced Venezuelan miner Joan Telo told the crypto news podcast, “En Consenso”, some of the implications of starting a cryptocurrency business in Venezuela.

Telo, who started cryptocurrency mining in 2011, said that, in principle, there are people who believe that mining activity provides instant fortune. Far from that, cryptocurrency mining yields, in Venezuela as in other countries, depend on many factors of the ecosystem, such as the difficulty of the network or market fluctuations. To this are added the operating costs that vary from one country to another.

In the case of the South American country with the lowest electricity rates in the world, some risk factors should also be considered. As Joan Telo commented, they include the instability of the electricity supply and the Internet connection, which impose the incorporation of additional protective equipment and an expensive downtime during blackouts.

Also, the fact that mining cryptocurrencies in Venezuela, although it is a legal activity, is exercised almost clandestinely, because the operator is exposed to harassment by elements of the police bodies. This implies, in turn, an additional expense for loss of equipment in possible seizures, payment of extortion or in the best case, migrate the entire operation to another location, once it is detected.

As Telo explained, electricity and the Internet connection are fixed expenses of a cryptocurrency mining operation. Therefore, to calculate the return on investment of the equipment it is important to know the energy cost that is measured in KW / hour.

"In Venezuela, that cost of KW / hour is less than $ 0.001, that is, less than a penny of a dollar per kilowatt," said the miner. “In comparison, for example, with the United States, in areas like Miami, the energy cost can be $ 0.14 per kilowatt, and if we compare it, for example, with Russia or with China we would be talking about 4 cents a kilowatt, then , Venezuela has the cheapest energy cost in the world and that is why it is considered the best place to mine, ”he said. "But just as it has the best energy cost that makes it more attractive, environmental hazards also make [the activity] complicated."

In this sense, Joan Telo pointed out that, in the case of Venezuela, although the energy cost is zero, these other risk factors that add costs to the cryptocurrency mining operation must be considered. In his opinion, the result is still positive, so it is feasible to sustain this type of entrepreneurship profitably in the country. "In fact, if it is done on a small scale, with a team or two in their homes, it seems to me that it is an excellent business, as long as people have patience, and do not despair to recover their money," said the experienced Venezuelan miner .