IF YOU want to mine bitcoin from the comfort of your own living room, you require three ingredients; some free software, a steady supply of (preferably cheap) electricity and a computer.  The citizens of many nations have become devotees. But why are Venezuelans among the most avid miners of the cryptocurrency?

Bitcoin provides people worldwide with the ability to exchange tokens of value online without having to rely on banks. All the necessary record-keeping is decentralised to a “blockchain”, an online ledger that holds the transaction history of all bitcoins in circulation. Crypto-evangelists extol the virtue of its decentralisation, highlighting that there is a fixed total supply, preventing the token from being debased by tyrannical governments. In functioning democracies with reasonable rates of inflation, there is limited take-up because there are so many other options on offer for creating wealth or for investing. Venezuelans, on the other hand, have almost no such opportunities, since the bolivar, their currency, has lost 99.9% of its value since 2016. Strict currency controls have been in place for 15 years, cutting off the supply of hard currencies, like the dollar, that retain their purchasing power. Even Jamie Dimon, a well-known banker who called bitcoin a “fraud” that will ultimately “blow up”, has admitted that, in somewhere like Venezuela, it might be useful.

Venezuelans who can afford it have imported machinery such as the Antminer S9, a shoebox-sized contraption selling for roughly $2,000 on Amazon, that sucks in cool air and electricity and spits out noise, heat and freshly mined bitcoins. And in one area Venezuelans have an edge. Electricity price controls have subsidised supply. The extent of the government’s subsidies means that, according to data from Crescent Electric Supply Company, Venezuela is the cheapest place to mine bitcoin in the world. Miners are arbitraging, buying an underpriced commodity (electricity) and converting it to bitcoin for a profit. On localbitcoins.com, a site that allows the crytocurrency to be exchanged for local currencies worldwide, Venezuela trades more bitcoin than China. Venezuelan miners can earn hundreds of dollars a week, a relative fortune. Some use it to store savings, others to buy scarce necessities.

Unfortunately, the government has caught on. President Nicolás Maduro does not like bitcoin miners, and the government’s ownership of the electrical grid enables it to locate, and crack down on, those using the unusually high amounts of electricity that bitcoin mining requires. There are no laws regarding cryptocurrencies, so targets have been arrested on spurious charges such as energy theft. Mining equipment has been seized by officials, some of which was then used for their own gain. While bitcoin can protect from the tyranny of governments printing money, other kinds of tyranny remain unchecked.