The central theses
- New rules in Venezuela will legalize cryptocurrency mining, but impose severe restrictions on miners.
- The country will establish a miners register and a central mining pool to control the industry.
- Venezuela has also cracked down on mining in the past.
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The regulatory authorities in Venezuela have introduced a mandate that regulates all bitcoin and crypto mining. The new rules were Published in Venezuela's Official Gazette, File No. 41,969.
The new rules
Although the mandate legalizes mining, all residents who wish to mine Bitcoin must first obtain a license from SUNACRIP, Venezuela's national superintendent of crypto assets and related activities.
Venezuela will create a comprehensive miners' register to keep a record of this data. Individual miners are required to describe their job, equipment, and other related information. Larger mining operations and ASIC operators will bring together all Venezuelan miners who are required to obtain special licenses.
In addition, Venezuela will set up a National Digital Mining Pool that unites all Venezuelan miners and enables profit sharing. It seems that this will be mandatory but only minimally enforced.
SUNACRIP provides incentives for those who join the pool and penalties for those who do not.
Mining in the past
This is not the first time Venezuela has had mining-related problems. Reports from 2016 suggest that Venezuelan bitcoin miners have been fined and arrested for mining crypto. Other reports suggest that the government has confiscated Bitcoin mining machines from individuals.
These new regulations have raised concerns in the crypto community. Bitcoin mining in Venezuela is controlled by a central authority, undermining the Bitcoin community's desire for decentralization.
In addition to the central power that companies like Bitmain have achieved, it is questionable whether mining is really the best way to achieve decentralization.
However, despite the strict regulations, it is unlikely that regulators can take full control of the mining industry. It is unlikely that any mining activity that does not use a lot of power or special equipment (e.g. CPU mining) will be detected.