As president, Nicolas Maduro rolls out the El Petro ICO, Venezuela is named the cheapest country in the world to mine Bitcoin. But is it also the most expensive place to live?
The manual for the first 82.4 million units of the Venezuelan cryptocurrency, El Petro was made available for download in multiple languages yesterday to much international criticism. The digital currency, which is linked to the countries oil reserves, has been derided as a workaround of the economic sanctions created to allow those in power to increase their wealth in the crypto market.
President Maduro announced that the valuation of the Petro’s 100 million tokens would be just over $6 billion and that the sale would bring a new economic era to the nation.
Cheapest Mining In The World
Meanwhile, the country has been named the cheapest location in the world to mine cryptocurrency. According to the company Elite Fixtures which carried out a study on the cost of mining around the world Venezuela is more than 100% cheaper then it’s near neighbor Trinidad and Tobago.
According to the company they took statistics supplied by countries and agencies around the world on electricity costs and compared the use on three of the most popular mining rig configurations. The cost in Venezuela was $531 followed by Trinidad at $1,190 with South Korea coming in at $26,170 per coin, the most expensive in the world.
China, Russia, and The United States present similar costs. China being slightly cheaper at $3,965 while both Russia and the US are around $4,700.
But Also The Highest Cost Of Living
While making money mining Bitcoin in the Latin American country may be very profitable due to its subsidized electricity doing almost anything else is very expensive. Inflation over recent years in Venezuela has been as high as 800% by some estimates making the Bolivar essentially worthless as the government prints more and more of the currency.
The oil-rich country carries a 14% budget deficit of its GDP and a 60 trillion debt after decades of mismanagement by corrupt or just truly wrong-minded leadership. Though the official exchange rate is about 6.3 Bolivar per US Dollar the black market rate is multitudes higher, perhaps as high as 100 times that.
Factor in the scarcity of everything from food to medicine, as well as a crime rate that has soared over the last three years and it’s clear that the cost of living in the country would offset the advantage of cheap electricity. Given the dire state of the economy as well as the government’s oblique regulatory stance on Bitcoin and other cryptocurrency trading the launch of El Petro seems an odd solution to the countries economic woes.